Topics: What's New from the Charities Directorate of CRA, Canadian Charity Law, Political Activities and Canadian charities
Today CRA has released the Minister of National Revenue's response to the recent changes on Political Activities by Canadian registered charities. The Government has announced that this is their final response to the Report of the Consultation Panel on the Political Activities of Charities, which came out March 31, 2017. It has taken the Government almost 2 years to release its final response on the report which came out at the end of March 2017! This report was promised for the summer of 2017 so I guess we can chalk this up to the Canadian government has never been so efficient at putting out announcements as in the week that the PM is being skewered on SNC-Lavalin. I wonder if the Liberals will release the religion guidance they have been hiding for 4 years (and the Conservatives for many years before that).
Along with this response, the Government is also lifting the suspension on political activities audits, which means that we could potentially see more penalties, suspensions and revocations of certain charities that were under audit and those audits/results were "suspended". In case you have forgotten the Liberal government on January 21, 2016 promised:
The independence of the Charity Directorate's oversight role for charities is a fundamental principle that must be protected. The Minister of National Revenue does not and will not play a role in the selection of charity audits or in the decisions relating to the outcomes of those audits.
Then on May 4, 2017 the CRA minister directed the CRA to suspend all political activity audits which was a clear breach of their earlier commitments. "...Minister Lebouthillier has asked the CRA to suspend all action in relation to the remaining audits and objections that were part of the Political Activities Audit Program, initiated in 2012."
Now the government almost 2 years later has directed CRA to lift the suspension: "Now that the Government has responded to the Panel Report, the suspension of the remaining audits and objections that were part of the Political Activities Audit Program, initiated in 2012, is lifted. The CRA will contact the affected charities to discuss their outstanding audits and objections."
The CRA revocation process, even when charities do terrible things, can take easily 5 years and sometimes even 15 years. This delay of 2 years has perhaps allowed some groups to issue many millions in receipts that they would not have been able to. Because of the confidentiality provisions of the Income Tax Act, CRA is not allowed to release the names of the charities that were potentially going to be revoked and not one of those charities has publicly released the CRA letters so the public and parliamentarians as usual are in the dark.
If you are interested in knowing more about the changes in political activities of charities, we have written several articles on these issues, including CRA releases Q&A on public policy dialogue and development activities by charities and CRA releases draft guidance “Public policy dialogue and development activities by charities”.
We will discuss an exciting new initiative to "enhance sector outreach and education" here. As well we have discussed the new Advisory Committee on the Charitable Sector (ACCS) here.
Below is the text of the final response from CRA to the Consultation Panel:
Government Response to the Report of the Consultation Panel on the Political Activities of Charities
On March 7, 2019, the Minister of National Revenue responded to the Report of the Consultation Panel on the Political Activities of Charities and the following recommendations:
Recommendation 1: Revise the Canada Revenue Agency’s (CRA) administrative position and policy
The CRA has developed and published a draft guidance for public consultation to explain how it will administer the new rules on public policy dialogue and development activities of charities (see Recommendation 3 below). The CRA is accepting feedback on the draft guidance until April 23, 2019.
Recommendation 2: Implement changes to the CRA’s administration of the Income Tax Act (ITA)
The Government is providing up to $5.3 million in new funding over the 2018–2019 to 2023–2024 period for the CRA to enhance sector outreach and education. This will include reinstating in-person information sessions and introducing videoconference information sessions for charities across Canada. The CRA will also strengthen its internal training for employees to ensure policies are implemented consistently, and will update relevant forms to reflect the new public policy dialogue and development rules.
The CRA has launched the Charities Education Program, conducting in-person visits with registered charities to provide them with support and guidance in meeting their obligations and maintaining their registered status.
The CRA will continue to make other administrative changes and to develop initiatives that align with the Panel Report, including:
Recommendation 3: Amend the Income Tax Act by deleting any reference to non-partisan political activities to explicitly allow charities to fully engage without limitation in public policy dialogue and development activities
Changes to the rules governing charities’ political activities were included in Bill C-86, Budget Implementation Act, 2018, No. 2, which received Royal Assent on December 13, 2018. These changes explicitly allow charities to fully engage without limitation in public policy dialogue and development activities, provided they are carried on in furtherance of a stated charitable purpose and do not support or oppose, either directly or indirectly, a political party or candidate for public office.
Now that the Government has responded to the Panel Report, the suspension of the remaining audits and objections that were part of the Political Activities Audit Program, initiated in 2012, is lifted. The CRA will contact the affected charities to discuss their outstanding audits and objections.
The Government has also decided to discontinue its appeal of the decision in Canada Without Poverty v. AG Canada because the legislative provisions at issue in the litigation are no longer applicable following the above mentioned changes.
Recommendation 4: Modernize the legislative framework governing the charitable sector
The Government is establishing a permanent Advisory Committee on the Charitable Sector (ACCS). The ACCS will provide recommendations to the Minister of National Revenue and the Commissioner of the CRA on important and emerging issues facing charities and qualified donees on an ongoing basis.
Hilary Pearson and Bruce MacDonald have accepted to be the ACCS’ first sector co-chairs. They will join the CRA co-chair, Geoff Trueman, Assistant Commissioner of the Legislative Policy and Regulatory Affairs Branch and 12 other members from the charitable sector and the Government.
The Government is providing $3.2 million in new funding over the 2018–2019 to 2023–2024 period to the CRA to support the ACCS to strengthen the relationship between the government and this important sector.
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.