Modernizing the 'Definition' of Charity: Charting the Tax Terrain of Statutory Reform

• Author: Reid Buchanan & Michelle Gallant
• Position: Robson Hall Faculty of Law, University of Manitoba/Professor, Robson Hall Faculty of Law, University of Manitoba
• Pages: 78-108

Modernizing the ‘Def‌inition’ of

Charity: Charting the Tax Terrain of

Statutory Reform

Reid Buchanan* & Michelle Gallant**

Amid considerable chatter about the renovation of charities governance, there is a lot of

clamor for a twenty-f‌irst century vision of benevolence. e contemporary state of af‌fairs

f‌inds governance thoroughly tethered to a conception of ‘charity’, or ‘charitable entity’

planted 400 years ago. at conception, developed within and shaped by the common

law, is perceived to ref‌lect an antiquated idea about benevolence that has little relevance

to the contemporary social order. While a statutory articulation of the def‌inition of

‘charity’ could ensure that modern governance matched and served the needs of modern

society, any renovation project happens within a tax context. In law, the meaning of

‘charity’ matters precisely because of its tax pertinence. e relationship between tax

and charities means that the crafting of any new vision needs to develop within, and

be framed by, an appreciation of the potential f‌iscal implications. is paper charts the

tax-centric dimension of charities governance. With a specif‌ic focus on the def‌initional

piece, it prof‌fers an analysis of the f‌iscal considerations relevant to modernizing the

def‌inition of ‘charity’.

* Reid Buchanan, Student, Robson Hall Faculty of Law, University of

Manitoba. I would like to thank the Legal Research Institute of the

University of Manitoba for providing me the opportunity to work on this

article. I would also like to thank Dr. Michelle Gallant for inviting me to

become involved with this project, for her guidance and wisdom, and for

sparking my interest in Charity Law and the governance of the non-prof‌it

sector. Any errors remain my own.

** Michelle Gallant, Professor, University of Manitoba, Faculty of Law.

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(2020) 6 CJCCL

I. I

II. C  T

III. H, C,   D

IV. T C F   C  ‘C’

V. T C L ‘D’  C

A. Common Features of the Charitable Terrain

B. Troubles with the Common Law Terrain

VI. T M N   T D

VII. C

I. Introduction

Parliament has a long history of promoting benevolence through

the tax system by nestling specif‌ic concessions in the Income Tax

Act (“I TA”).1 is undergirds giving and shares some responsibility for

fostering a vibrant Canadian charitable sector. Although the promotion

of this vision exists in statute law, Parliament has never articulated

a particular vision of benevolence. ere is no statutory def‌inition of

‘charity’. Statute law confers special treatment onto charities but does not

specify what entities qualify for this treatment. Instead, the promotional

scheme applies to organizations that the common law decides are

‘charitable’.

is benevolence framework, the coupling of explicit statute-based

tax incentives with a concept determined by the common law, has never

proven particularly controversial. In almost a century of promoting

charity, statute law has never been modif‌ied to align tax concessions

with a statutory def‌inition. As recently as 2017, a doyen of charity law

opined that “[n]o signs are evident that an agreed statutory def‌inition or

description is likely to appear in the foreseeable future in Canada”.2

Nonetheless, winds of change may be stirring. After many years

of scant scrutiny of the legal governance of charities, the years 2016,

2018, and 2019 witnessed the formation of three separate federally-