Can A Political Purpose Also Be A Charitable Purpose? Perspectives On The Impact Of Re Greenpeace Of New Zealand Inc. In Canada

A number of Canadian charities have recently come under scrutiny by the Canada Revenue Agency (CRA) regarding their charitable status. In Canada, a registered charity pays no income tax and is able to issue tax receipts to its donors. Those receipts are then used for non-refundable tax credits or deductions. The Canadian Press has reported that many registered charities in Canada, ranging from environmental to international aid and human-rights groups, have recently been subjected to political-activity audits by the CRA. The CRA has apparently budgeted approximately $13 million for these audits.1

In this context, we provide some insight into the Canadian law on registration for charitable status in light of a recent Supreme Court of New Zealand decision.

Current Canadian law on political activities and charitable status

Under Canadian law, registered charities are not allowed to have political purposes.

However, subsections 149.1(6.1) and (6.2) of the Income Tax Act (ITA) state that where a corporation, trust, or any other organization devotes substantially all of its resources to charitable purposes, it may also devote a part of its resources to political activities, and continue to meet the definition of charitable foundation or charitable organization, provided that those political activities are ancillary and incidental to its charitable purposes and do not include the direct or indirect support of, or opposition to, any political party or candidate for public office. The CRA interprets "substantially all" in subsections 149.1(6.1) and (6.2) to mean 90% of resources, including financial assets, equipment, premises and human capital.

The Canadian jurisprudence in this area of law was largely established by the Federal Courts in the mid-1980s, inspired by a 1917 decision from House of Lords, Bowman v Secular Society Ltd.2 In Bowman, it was held that, "A trust for the attainment of political objects has always been held invalid." Canadian courts, following Bowman, have adopted a similar position. In 1999, this was confirmed by the Supreme Court of Canada in Vancouver Society of Immigrant and Visible Minority Women v Canada (Minister of National Revenue).3

The CRA has issued guidance, which does not have force of law, clarifying how the CRA may interpret the ITA provisions. Guidance issued in 2003 provides that, "Any purpose that suggests convincing or needing people to act in a certain way and which is contingent upon a change to law or...