The purposes and activities divide in charity regulation.

• Author: Broder, Peter

Over the last couple of years the media has been filled with stories and there has been much fretting in the voluntary sector about the Canada Revenue Agency (CRA)'s auditing of registered charities' Political Activities. It is unclear as yet, however, how much regulatory compliance action will be taken based on isolated or individual acts of the groups being examined--as opposed to impugned work that was seen and undertaken by the organization as closely linked to advancing its mandate. That is, groups having what at common law would be called an unstated political purpose.

Leaving aside partisan political behaviour, which is in a category by itself, CRA should avoid sanctioning organizations for one-off or incidental political conduct. Here is why.

As has been noted in this column before, common law concerning charity issues generally turns on construction and interpretation of an entity's purpose(s). While the meaning of charity at common law and the technique used so that meaning can evolve--reasoning by analogy from what the courts have in past held to be charitable--are adopted for regulation of registered charities under the Income Tax Act (ITA), the story doesn't end there.

Frequent references to "activities" in the ITA have clouded the jurisprudence and have often lead to troubling rulings. Unhappily, the primacy of purpose or purposes in assessing eligibility for status as a registered charity is apt to be lost when the courts, as they frequently do, delve into the minutiae of an organization's day-to-day operations as part of their assessment of whether it ought to be given preferential tax treatment.

An emphasis on regulation of activities--presumably motivated by the same fiscal integrity considerations--has also begun to crop up in CRA guidance documents. For example, CRA has issued guidance on "Research as a Charitable Activity" and has commented in some of its materials on "Providing information as a charitable activity". In this commentary, focus on the purpose(s) for which the activity was undertaken is given short shrift.

However, as Justice Iacobucci stated at paragraph 152 of his majority decision in Vancouver Society of Immigrant and Visible Minority Women v Minister of National Revenue, [1999] 1 SCR 10 an activity needs to be assessed on the basis of the purpose it is undertaken to advance, and not against other criteria:

While the definition of "charitable" is one major problem with the standard in s. 149.1(1), it is...