Constitutionalizing the Registered Charity Regime: Reflections on Canada Without Poverty

• Author: Kathryn Chan
• Position: Associate Professor, University of Victoria Faculty of Law
• Pages: 151-190

Constitutionalizing the Registered

Charity Regime: Ref‌lections on

Canada Without Poverty

Kathryn Chan∗

In Canada Without Poverty v Canada (AG), the Ontario Superior Court of Justice

struck down provisions of the federal Income Tax Act that limited the political

activities of charitable organizations, on the ground that the provisions violated the

freedom of expression of the registered charity before the court. is paper addresses

the decision’s complex legacy, ref‌lecting on the promise and the perils of charity law’s

increasing encounters with public law. I address some of the dif‌f‌icult questions raised

by the decision: (1) What types of associations are rights-holders under the Canadian

Charter of Rights and Freedoms? (2) What are the constitutional limitations on the

government’s ability to set the outer bounds of the registered charity regime? (3) What

is the rationale for limiting the political advocacy of charities? While Canada Without

Pove rty has generated signif‌icant improvements to the registered charity regime, I

argue, the Ontario Superior Court of Justice missed an important opportunity to draw

constitutional law and charity law into closer conversation.

∗ D. Phil (law)(Oxon.); Associate Professor, University of Victoria Faculty

of Law. I thank Morgane Evans-Voigt and Benjamin Krymalowski for

their excellent research assistance. I thank Jennifer Beard, Samuel Singer,

Richard Moon, Gillian Calder, Howard Kislowicz, Kate Glover Berger,

Wade Wright and Peter Broder for their generous and insightful feedback.

152

Chan, Constitutionalizing the Registered Charity Regime

I. I

II. T C  Canada Without Poverty v Canada (aG)

A. Consequences and Conditions of Registered Charity Status

B. e Political Advocacy Rules

III. T D  Canada Without Poverty v Canada (aG)

A. Facts and Issues

B. e Decision

IV. R  Canada Without Poverty v Canada (aG)

A. Ref‌lection One: e Registered Charity as Rights Holder

B. Ref‌lection Two: e “Megaphone v Muzzle” Debate

1. e Positive Rights/Negative Rights Distinction

2. Did CWP Make a Positive or a Negative Freedom of

Expression Claim?

3. e Strength and Scope of CWP’s Positive Rights Claim

C. Ref‌lection ree: Justifying the Registered Charity Regime

V. C: T P  P  C L’ E 

P L

I. Introduction

In the summer of 2018, the longstanding rules governing the political

activities of registered charities came to an abrupt and rather

undignif‌ied end. In Canada Without Poverty v Canada (AG),1 Morgan J

of the Ontario Superior Court of Justice held that paragraphs 149.1(6.2)

(a) and (b) of the Income Tax Act2 (“ITA”), which functioned to prohibit

charitable organizations from devoting more than 10% of their resources

to non-partisan political activities, unjustif‌iably violated the freedom of

expression of the anti-poverty organization before the court. “What is

political?”, mused Morgan J in the opening paragraph of his judgment,

brief‌ly considering the answers of political philosophers before declaring

the restrictive provisions of no force and ef‌fect.

e Canadian charitable sector reacted swiftly and positively to the

153

(2020) 6 CJCCL

decision.3 e Government of Canada also responded swiftly, pledging

to appeal the decision but also to amend the ITA in the manner the

decision envisaged.4 By December 2018, Parliament had enacted

those amendments. Registered charities in Canada may now carry out

unlimited public policy dialogue and development activities that further

a charitable purpose.5

e Attorney General of Canada ultimately chose not to appeal

Canada Without Poverty.6 e decision thus stands, having produced

a happier charitable sector but also considerable legal uncertainty. e

statutory amendments to which Canada Without Poverty gave rise have

improved the registered charity regime in a number of respects. ey have

increased the regime’s coherence by aligning its def‌initional provisions

more closely with the common law tradition upon which they are based.7

e amendments have also reduced the chilling fear that many registered

charities had of falling on the wrong side of the ITA’s murky “charity-

politics” divide, freeing up charitable resources and encouraging charities’

participation in the development of public policy.8 However, the legacy

of Canada Without Poverty may be more complex than this happy news

suggests. e decision imposes signif‌icant constitutional limitations

on government in its design of the registered charity regime. Certain

elements of Morgan J’s reasoning may have far-reaching implications,

and are worthy of further ref‌lection. Certain elements of Morgan J’s

decision may have far-reaching implications and are worthy of further

ref‌lection.

I begin this comment by examining the legal context within which

Canada Without Poverty arose. I explain the dif‌ference between not-for-

prof‌it status, charitable status and registered charity status, and outline

the traditional limitations on the political activities of registered charities

in Canada (Part II). I then summarize Canada Without Poverty v Canada

(AG) (Part II). I ref‌lect on several elements of the decision, including the

characterization of Canada Without Poverty (“CWP”) as a constitutional

rights-holder, the treatment of its freedom of expression claim, and the

rejection of the government’s attempts to justify the ITA’s limits on the

political activities of registered charities (Part III). Finally, I consider the

promise and perils of charity law’s increasing encounters with public law.