Charities' Political Activities Question Quieted, If Not Fully Resolved.

AuthorBroder, Peter
PositionColumns

The long tumult over registered charities' role in public policy debate appears on the cusp of being resolved, or at least being significantly quieted, in the wake of three recent developments.

First, in December, the federal government enacted legislation to amend the Income Tax Act (ITA) in response to a July 2018 Ontario Superior Court decision that held its provisions governing registered charities' non-partisan political activities are unconstitutional. That legislation, which has now been proclaimed in force, provided that charities could contribute to public policy discussions in furtherance of their charitable purposes and would not be subject to quantitative limits in doing so.

Second, in mid-January, the Canada Revenue Agency Charities Directorate released guidance (available at: https://www.canada.ca/en/revenue-agencv/services/charities-qivinq/charities/policies-quidance/public-policv-dialoque-development-activities.html) that elaborated on the measures and the permissibility of participation in public policy dialogue and development activity. That guidance replaced earlier draft guidance (quickly withdrawn) on the new legislation that had seemed to limit its applicability. There remain some concerns with the January guidance, which will be discussed below, but the document clearly points toward creating an enabling environment for registered charities wanting to engage in policy work.

Lastly, at the end of January, the government announced it was dropping its appeal of Canada Without Poverty v Attorney General of Canada, the Ontario Superior Court case that held the ITA political activities provisions violated the Charter of Rights and Freedoms. Although the amended legislative measures would still have applied in the future, and the appeal was thought to be largely driven by government concerns that other ITA provisions featuring preferential tax treatment might draw Charter scrutiny, the outcome of the appeal could have cast doubt on the government's move to reform the provisions.

There remain questions around the new legislation and guidance. The scope for a registered charity to carry on public policy dialogue and development-as much as 100% of its activity, according to the Department of Finance Explanatory Notes released with the legislation--has to be understood together with the continuing common law prohibition on charities having a "political" purpose.

The difficulty of reconciling devoting 100% of your activities to...

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