Giving charities their due.

• Author: Broder, Peter
• Position: Not-for-Profit Law

We have long since left the days when for-profit corporations were granted charters and existed on the sufferance of the reigning monarch. And, with the recent passage of Bill 4, federal non-share corporations will soon enjoy as-of-right incorporation instead of relying, as they did under the previous legislation, on ministerial discretion. However, in the world of charities, there is a different reality.

Being a registered charity has always been considered a privilege, not a right. So the extent to which registered charities are protected from unilateral regulatory actions is uncertain. Questions about how registered charities are regulated are further muddied by the fact that the federal and provincial governments share jurisdiction over them, which makes the extent of federal authority in this area unclear.

However, several cases in recent months have begun to indicate the amount of deference the courts are willing to afford the Canada Revenue Agency (CRA) in its treatment of registered charities. The answer is a lot.

Historically, the courts did afford registered charities some protections. In the early 1980s, the Federal Court of Appeal (FCA) held, in Renaissance International v. Minister of National Revenue, that registered charities having their status revoked were entitled to be accorded procedural fairness and other elements of natural justice in decisions regarding their status.

So, under current Canada Revenue Agency Charities Directorate practice, charities whose status is in question are informed of the case against them and have the opportunity to meet that case.

This has not, however, precluded the CRA from recently acting quickly and aggressively to shut down a number of charities allegedly involved in donation tax schemes or other abusive behaviours. To date, the courts have upheld the regulator's actions.

When a decision is taken to revoke a registered charity's status, a notice is published in the Canada Gazette recording the intended revocation. Customarily, the CRA does not publish a notice of its intent to revoke until the 90-day Notice of Objection period of the charity has expired. (The 90 days dates from the mailing of the Minister's letter advising the charity that it is being revoked). However, in several recent instances in which charities are allegedly involved with illicit tax shelters, the CRA has ignored this practice and had the notice published prior to the 90 days elapsing.

In International Charity...