• First Reference
  • About us
  • Contact us
  • Blog Signup 📨

First Reference Talks

Discussions on Human Resources, Employment Law, Payroll and Internal Controls

  • Home
  • About
  • Archives
  • Resources
  • Buy Policies
You are here: Home / Not for Profit / Political activities law: Charity brings new Charter challenge

By Drache Aptowitzer LLP | 3 Minutes Read December 14, 2016

Political activities law: Charity brings new Charter challenge

political activitiesWhen the Liberals came into power last year, the new Minister of National Revenue announced that she was putting a halt to the “political activities” audit of charities that the previous administration had been conducting for the past few years. In practice, this meant that the charities in line to be audited under the program were given a reprieve, but those that were already in the course of being audited were not. One of the latter charities, Canada Without Poverty (CWP), is now bringing a constitutional challenge against the political activities law.
As our readers surely know, there has been quite a bit of tension the past several years between the Canada Revenue Agency (CRA) and the charities it administers regarding the definition of political activity and the acceptable limits within which charities may engage in it. Canadian law and policy on the subject is quite a bit stricter than in other Commonwealth and developed countries.
The Income Tax Act (ITA) allows for political activities only so far as they do not include direct or indirect support or opposition to any political party or candidate, and even then the activity must be “ancillary and incidental” to charitable activities and not prevent the charity from devoting “substantially all” of its resources to charitable activities. The CRA in turn has interpreted “substantially all” to mean 90 percent, leaving a max of 10 percent of resources allowed to be spent on non-partisan political activity. The CRA has been very broad in its interpretation of what counts as a prohibited ‘partisan’ activity. For example, it censured CWP in part for activities such as publishing links on their website to newspaper articles recommending changes to government policies, and holding a dinner where impoverished people could rub shoulders with policy–makers.
Add to this the fact that “resources” doesn’t just mean money—it includes things like volunteer hours dedicated to a task—and can imagine just how quickly the work of tracking, reporting, and defending the use of resources on such a broad range of activities becomes a huge challenge, especially for large organizations.
In late August, CWP filed a constitutional court challenge against the political activity provisions in the ITA for violating two of the rights in the Canadian Charter of Rights and Freedoms (Charter): the s. 2(a) right to freedom of expression, and the s. 2(d) right to freedom of association (think back to the dinner the CRA didn’t like them hosting). This will also require CWP to convince the court that these rights are limited in a way that is unreasonable, since the Canadian constitution explicitly allows the government to put reasonable limits on Charter rights.
The CWP is ultimately not arguing against the CRA’s audit findings, but rather the legitimacy of the underlying law that the CRA is tasked with enforcing. They are taking the position that tax breaks for charities are currently contingent on limits to freedom of expression, and that in their case in particular the restrictions outright prevent them from effectively pursuing their charitable goal of relieving poverty.
This court challenge is arguably the inevitable outcome of increasing crackdowns in Canada, especially compared to the increasing freedoms elsewhere in the world over the same time period. Indeed, looking back across CWP’s history, it is obvious that the CRA’s policies have restricted over time. A CRA document from 2009 related to their charitable registration mentions only a caution about political activity, even though CWP has been generally carrying out the same sorts of activities for years. The Liberal government took a first conciliatory step by cancelling the political activities audit, and we understand they are discussing a new legislative framework for administering the political activities of charities, but CWP’s challenge could potentially force a change at a deeper level that would bring Canada more into line with the developed world’s 21st century values.
By: Alexandra Tzannidakis

  • About
  • Latest Posts
Drache Aptowitzer LLP
Drache Aptowitzer LLP has extensive experience in taxation matters as well as assisting Charity and Not for Profits. Adam Aptowitzer has argued cases all the way up to the supreme court in defence of taxpayers to get a fair deal. Their dedicated team of experts can give you the guidance you need for fair results.
Latest posts by Drache Aptowitzer LLP (see all)
  • The Lord works in mysterious ways - February 12, 2020
  • It’s a whole new ball game for charities at the FCA - January 15, 2020
  • Charities in the waiting room - December 11, 2019

Article by Drache Aptowitzer LLP / Not for Profit / Canada Revenue Agency, Canada Without Poverty, canadian charter of rights and freedoms, CRA, Income Tax Act, political activities, political activities law, political activity, political activity provisions

Share with a friend or colleague

Get the Latest Posts in your Inbox for Free!

Electronic monitoring

About Drache Aptowitzer LLP

Drache Aptowitzer LLP has extensive experience in taxation matters as well as assisting Charity and Not for Profits. Adam Aptowitzer has argued cases all the way up to the supreme court in defence of taxpayers to get a fair deal. Their dedicated team of experts can give you the guidance you need for fair results.

Footer

About us

Established in 1995, First Reference is the leading publisher of up to date, practical and authoritative HR compliance and policy databases that are essential to ensure organizations meet their due diligence and duty of care requirements.

First Reference Talks

  • Home
  • About
  • Archives
  • Resources
  • Buy Policies

Main Menu

  • About First Reference
  • Resources
  • Contact us
  • 1 800 750 8175

Stay Connected

  • Facebook
  • LinkedIn
  • Twitter
  • YouTube

We welcome your comments on our blog articles. However, we do not respond to specific legal questions in this space.
We do not provide any form of legal advice or legal opinion. Please consult a lawyer in your jurisdiction or try one of our products.


Copyright © 2009 - 2023 · First Reference Inc. · All Rights Reserved
Legal and Copyright Notices · Publisher's Disclaimer · Privacy Policy · Accessibility Policy