Senate Report Offers Blueprint for Federal Charity Law Reform.

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

With a federal election slated for this October, there is little chance we will see any major changes to the Income Tax Act (ITA) rules governing registered charities in the coming weeks.

Once the election is over, however, whichever party forms government could do worse than use the recently-released Report of the Special Senate Committee on the Charitable Sector as a blueprint for a needed and long-awaited revamping of federal regulation of charities and non-profit organizations. The report, Catalyst for Change: A Roadmap to a Stronger Charitable Sector, is available online.

Leaving aside the issue of the role of registered charities in public policy debate, which was the subject of new legislation passed by Parliament last December, charity regulation is not something that has drawn much attention federally in recent years. (Indeed, action on the political activities rules was only prompted once there had been a successful court challenge to the old ITA provisions under the Canadian Charter of Rights and Freedoms.)

The report offers a roadmap for addressing a host of problems plaguing the current regulatory regime.

It features 42 recommendations, and while not all of them will be feasible to implement or are uncontroversial, taken broadly they present the opportunity to:

* modernize the current regulatory system;

* simplify or clarify various regulatory structures or requirements;

* reduce unnecessary red tape for registered charities and other sector groups; and

* better align Canadian regulatory practice with that of comparable jurisdictions.

The report, Catalyst for Change: A Roadmap to a Stronger Charitable Sector, is available online.

Major reform of the framework would also almost certainly trigger large efficiency gains both for the regulator and sector organizations.

Before any reform is undertaken, it is important to better define the rationale for charity regulation. That will both help ensure consistent future development of law in this area and reduce the risk of overwhelming organizations that are heavily volunteer-driven with compliance obligations. Commonly cited rationale are:

* to preserve tax-assisted assets (for eventual use on public benefit purposes);

* to economize or limit a tax expenditure; and

* to justify, and support, some idea about what is legally considered charity.

Historically, in Canada, what qualifies as a registered charity has largely been defined through the common law--past rulings by judges about...