Policing Fake News And Other Updates: CRA Finalizes CG-027, Public Policy Dialogue And Development Activities By Charities

Published date19 December 2020
Subject MatterCorporate/Commercial Law, Tax, Charities & Non-Profits , Income Tax
Law FirmMiller Thomson LLP
AuthorMs Katrina Kairys

On November 27, 2020, Canada Revenue Agency's ("CRA") Charities Directorate announced the release of five new and updated administrative guidances.

Among these guidances is CG-027, Public policy dialogue and development activities by charities (the "Guidance"), which provides CRA's interpretation of the new provisions in the Income Tax Act (Canada) (the "ITA") regarding the ability of charities to engage in policy debate and advocacy. CRA published a draft of the Guidance in January 2019 to elicit feedback from the public and various stakeholders (the "Draft Guidance"). See our previous article for an overview of the Draft Guidance.

The finalized Guidance, largely similar to the Draft Guidance, resolves some ambiguities and provides additional examples to help inform readers. That said, there are a few additions to the Guidance that require clarification.

By way of background, the ITA previously distinguished between "political activities" and "charitable activities", requiring a charity to devote substantially all of its resources to charitable activities. Generally, CRA interpreted "substantially all" to mean 90% or more. Therefore, charities could devote no more than 10% of their resources to non-partisan political activities. This was the longstanding law and policy until the 2018 decision of Canada Without Poverty v. Attorney General of Canada1 in which the Ontario Superior Court held that the "substantially all" requirement and CRA's 10% rule were unconstitutional, as they unreasonably limited freedom of expression.

After the decision was released, the federal government amended the ITA to remove the limit on non-partisan political activities. The definition of "charitable activities" in the ITA now includes "'public policy dialogue and development activities" ("PPDDAs") carried on in furtherance of a charitable purpose. However, charities are still prohibited from directly or indirectly supporting, or opposing a political party or candidate for public office.

In response to the legislative changes and to replace the now-defunct policy statement CPS-022, "Political activities", CRA has released the Draft Guidance on PPDDAs in 2019. Pursuant to the Guidance, PPDDAs include activities which seek to influence the law, policies or decisions of government. In the Guidance, CRA provides a non-exhaustive list of PPDDAs, such as providing information, conducting research, and advocating to change a law.

In the finalized Guidance CRA made a few noteworthy...

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