Political Activities Of Charities

Introduction

There has been a great deal of activity over the past few years over the role of charities in public policy debates and a number of significant developments recently that have changed the landscape for charities in this area.

Background

The precursor to the recent developments starts with the CRA audit programme of reviewing the political activities of charities which commenced in 2012. The first wave of audits targeted environmental charities but later expanded to include poverty, human rights and international-development charities. The government later clarified that while about 30 charities were audited with respect to political activities, only 5 resulted in determinations to revoke registration, all of which were primarily based on facts that were beyond their involvement in political activities.

In January 2016 the government announced a suspension of the audits and commenced a public consultation on the rules regarding the involvement of charities in political activities.

On May 4, 2017 the CRA published the Report of the Consultation Panel on the Political Activities of Charities (the "Consultation Report").

Recommendation No. 3 of the Consultation Report recommended that "the Act should be amended by deleting any reference to non-partisan political activities to explicitly allow charities to fully engage, without limitation, in non-partisan public policy dialogue and development, provided that it is subordinate to, and furthers, their charitable purposes".

On July 16, 2018 the Ontario Superior Court of Justice struck down those provisions of the Income Tax Act (the "Act") that restricted the amount of non-partisan political activities that a registered charity could undertake. The Canada Without Poverty v. AG Canada ("CWP") case1 provided that these provisions infringe on the charity's right of freedom of expression under ss. 2(b) of the Canadian Charter of Rights and Freedoms. The court also found that there was "no justification of ss. 149.1(6.2) that draws a distinction between charitable activities and non-partisan 'political activities' in the nature of public policy advocacy".

On August 15, 2018, the Minister of National Revenue announced its intention to appeal this decision but that in the meantime the appeal of the CWP decision would not change the direction of the government to take steps to remove the quantitative limits on political activities and to implement Recommendation no. 3 of the Report of the Consultation Panel on the Political Activities of Charities (the "Report") (See Fasken Bulletin on "Political Activities of Charities: A New World" dated August 21, 2018). To this end, the Act was revised to effectively remove the distinction between 'non-partisan political activities' and 'charitable activities' by confirming that 'public policy dialogue and development' would be included in the definition of 'charitable activities'.

Evolution of the New Legislation

On September 14...