Sports and charity.

AuthorBroder, Peter
PositionNot for Profit Law

As I write this, it is not possible to know how well or poorly Canada performed in the Beijing Olympics. No doubt that will be a subject of much discussion around the water cooler later this year. We do know that Canada's weak performance at the 1968 Mexico Olympics was one of the factors that spurred measures to give Registered Canadian Amateur Athletic Associations (RCAAAs) special tax treatment.

RCAAAs are national umbrella bodies associated with individual sports and, like registered charities, can issue tax receipts to donors for contributions they receive. Often they are governing bodies mandated, among other activities, to play a role in identifying and supporting elite amateur athletes for international competitions.

Inclusion of the RCAAA scheme in the Income Tax Act [ITA] provided occasion for a recent clarification of the law on whether sports activities can be charitable and whether groups promoting or providing sports programs can be registered charities. A Federal Court of Appeal ruling that Parliament's creation of a special tax category for RCAAAs could bar other types of groups engaging in amateur sports from qualifying as registered charities triggered an appeal to the Supreme Court of Canada. It considered the question of sports activities and charitable status.

[Note: In my then role as Corporate Counsel for Imagine Canada, I helped mount an intervention in this case by Imagine Canada, funded by The Muttart Foundation and several other foundations.]

In 2007, the Supreme Court held in A. Y.S.A. Amateur Youth Soccer Association v. Canada (Revenue Agency) [A.Y.S.A.] that by creating the RCAAA category, Parliament did not foreclose the possibility of groups promoting or providing sports programs from becoming registered charities. The ruling also affirmed earlier judgments that held sporting activities could be charitable where they advanced a recognized charitable purpose, even though they might not qualify as charitable in their own right.

On the facts before it, the Court found that the organization seeking to be registered in the case did not qualify, and was unwilling to go as far as finding that promoting or providing amateur sports should be a recognized charitable purpose.

The A. Y.S.A. judgment is welcome in its repudiation of the view that the RCAAA provisions of the ITA don't preclude organizations with sports activities as part of their mandate from becoming registered charities, but leaves the law in this area...

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