Yes.  For most people it is obvious that CRA has jurisdiction over registered charities under the Income Tax Act.  However, a recent case International Pentecostal Ministry Fellowship of Toronto v. The Queen – (FCA)  makes it clear that the arguments forwarded by some tax litigators that CRA does not have jurisdiction to regulate registered charities under the Income Tax Act is without merit.

In the CRA’s Fundraising Guidance they note:

“Under section 91(3) of The Constitution Act, 1867, the federal government is empowered to establish the federal tax system. The Income Tax Act (Canada) exempts registered charities from tax on their income and entitles them to issue official tax receipts. The CRA is responsible for administering the Income Tax Act and, therefore, for regulating registered charities in Canada.

Since the Income Tax Act does not contain a definition of “charity,” eligibility for registration is based on meeting the common law meaning of the term and compliance with the Income Tax Act. Although common law requires that registered charities have exclusively charitable purposes, and the Income Tax Act requires a registered charity to devote all of its resources to charitable purposes and activities, it is permissible for a charity to use some resources for fundraising without breaching common law or statutory rules.

Under sections 92(7) and 92(13) of the Canadian constitution, the regulation of most aspects of charities’ operations falls within provincial jurisdiction. This guidance deals only with issues related to the federal regulation of fundraising by charities registered under the Income Tax Act, as derived from the authority described above, and is not intended to address the various provincial obligations. Charities, whether federally registered or not, are subject to provincial requirements with respect to fundraising and other aspects of their operations.”

The International Pentecostal Ministry Fellowship of Toronto v. The Queen – (FCA) case is not referred to in the CRA Fundraising Guidance as the Fundraising Guidance was published before the decision.

To review the CRA Fundraising Guidance see “How do I find the CRA Guidance on Fundraising for Canadian charities?”