November 2, 2018
Regulation of registered charities' "political activities" has long been a bugbear of both the sector and governments. My last column dealt with an Ontario Superior Court decision that ruled parts of the current Income Tax Act (ITA) provisions governing charities' political activities unconstitutional as in violation of the Canadian Charter of Rights and Freedoms. Much has happened since then.
In mid-September, the government announced that it would both be appealing the ruling (which has implications for other parts of the ITA that feature conditional preferential tax treatment) and introducing legislation to reform the impugned sections of the current legislation.
Later in September, the proposed reform legislation was released. It essentially removed the "substantially all" element of the old provisions and returned to a model where political activities of registered charities are assessed based on the purposes they further, rather than having in-and-of-themselves a charitable or non-charitable character. The new measures also retained the prohibition on partisan political activities that was part of the old provisions.
As parts of the proposed measures are retroactive, both the government and Canada Without Poverty (the party that brought the Superior Court application) have agreed that the appeal of the decision should be postponed pending enactment of the new legislation.
Historically, courts and regulators in most jurisdictions have relied on an analysis of purposes--and the furtherance through activities of those purposes--to determine whether the entity qualifies as a charity. In this context, it is well established that purposes that are partisan are a bar to being a charity.
However, the case law around purposes that are not explicitly partisan, but entail work that overlaps with positions held by parties or candidates, is inconsistent and difficult to reconcile. It is also rooted in doctrines and worldviews that are at odds with many contemporary values. For example, if a court held as charitable a group advocating for changes in law or policy, it would be usurping the roles of other branches of government to determine what laws ought to be in place and how they ought to be administered. A more modern take on this is that a dynamic and consultative process is the preferred way to develop and implement law and policy.
In the 1980s this whole matter came to the fore in Canada when a Toronto legal clinic sought...