This last week I was involved with 2 events in which members of the Charities Directorate spoke on the subject of political activities.  First, on Wednesday, Linda Desrochers, Director of the Determinations Section of the Charities Directorate, spoke on recent developments including political activities and the 2012 budget at the Blumbergs’ Canadian Charity Law Institute on November 28, 2012.  Secondly, on Thursday November 29, 2012 I spoke at the Canadian Council for Refugees’ Fall Consultation in Toronto on a panel with Zachary Euler of the Common Law Policy and Public Education Section of the Charities Directorate.

Here is some of what I learned[This along with everything else on the blog is legal information and not legal advice and it is subject to the Terms of Use and restrictions on this website]:


When a registered charity makes a gift to another registered charity for a purpose of supporting the registered charity’s political activities it will now be considered a political activity and needs to be counted toward the donor charity’s resources used for political activities (the “10%”). In the 2012 Budget, the Income Tax Act (Canada) was amended to broaden what constitutes a political activity to include grants to other registered charities that are designated for political purposes so now section 149.1(1) says a “political activity” “includes the making of a gift to a qualified donee if it can reasonably be considered that a purpose of the gift it to support the political activities of the qualified donee.”  It was not clear to me until now how CRA would determine when it would “reasonably be considered that a purpose of the gift it to support the political activities of the qualified donee.”  For example, if a foundation provides funds to a registered charity with no conditions but that registered charity does some political activities then would any of the amount need to be included?

CRA gave the example of one registered charity “giving $10,000 to another registered charity, with the direction that the recipient spend $9,000 as it sees fit and $1,000 on its political activities.”  CRA noted that in that case the registered charity would report the $10,000 gift, and then further identify the $1,000 given to support the recipient’s political activities in the place “Was any part of the gift intended for political activities? If yes, report the amount.”

CRA advises “The donor charity is not responsible for tracking how its gift is actually used by the recipient charity.”  This is important and CRA views the intention or designation from the donor charity on the gift, or part of the gift, that would require certain funds to be spent on political activities should be reported as political on the T3010 and in the T1236.  Therefore, if there is a written or verbal direction or other understanding from the donor charity to the recipient charity that the funds are to be used for political purposes then the donor charity would have to include the amount in its “political activities”.  However if the donor charity is providing a gift to another registered charity without any requirements it be spent on political activities the donor charity does not need to either ensure that funds are used on political or charitable or other activities in terms of compliance with the Income Tax Act (Canada).  Furthermore, if a charity provides unrestricted funds, or restricted funds that do not contain any requirement to spend the resources on political activities, then it does not matter how the recipient charity spends the funds on political activities.  In other words if you know that Charity A spends about 5% on political activities and you provide them with unrestricted funds then you would not include any of the grant as political activities on the donor charity T3010.  If you intend that $10,000 is to be spent on political activities (for example, you have a grant agreement to this effect) then such $10,000 should be recorded on the donor charity’s T3010 even if the recipient charity breaches it obligations under the grant agreement and inappropriately spends the funds on something else. 


Apparently CRA’s Guidance on Political Activities (CPS-022) is in the process of being updated to include the recent budgetary changes. 

CRA noted that if an activity is one of the four types of political activities (3 listed in CPS-022 and one in the budget) then it is a political activity.  CRA does not accept the argument that “But our change in the law will have a positive impact on our charitable mission.”  CRA takes the view that if it is within the definition of political (and not one of the exceptions) then it is political.  In other words it is not whether the outcome of an activity would be beneficial – as CRA says “it is the form that the activity takes”. 


These changes will be for T3010s filed with fiscal years that end in 2013.  A revised T3010 will be available in 2013.

Registered Charities already disclose how much income they receive from outside of Canada.  Now charities will also need to note if any of such funds are supposed to be spent on political activities.

Section C5 already asks charities:
Whether a charity carried out political activities?
Total amount spent by the charity on these political activities?

Section C5 will ask more questions including:
Of this amount, the total amount of gifts made to qualified donees?
Total amount received from outside Canada that was directed to be spent on political activities?

There will be a new “Schedule 7” to the T3010.

The new Schedule 7 according to CRA will ask more or less some or all of the following questions:

“Describe the charity’s political activities, and the link to its purposes.
A table has been added for the charity to Identify the way the charity participated in or carried out political activities during the fiscal period, for example:
Media releases and advertisements
Conferences, workshops, speeches, or lectures
Rallies, demonstrations, or public meetings
Gifts to qualified donees for political activities

The charity checks a box indicating the nature of resources used for each political activity:


Finally, if a charity received funding from foreign sources for political activities, a table has been added to report:

The political activity the funds were intended to support.
The amount received from each foreign country.
The corresponding country code. (FR – France)”

According to CRA new lines will be added to the Qualified Donees Worksheet / Amounts Provided to Other Organizations (T1236) relating to each gift:
“Was any part of the gift intended for political activities? If yes, report the amount.”


Apparently the one paragraph explanation in the T3010 will be modified (I had to read it a few times to see what was different). The new wording will be something like “A registered charity may pursue political activities only if the activities are non-partisan, related to its charitable purposes, and limited in extent. A political activity is any activity that explicitly communicates to the public that a law, policy or decision of any level of government inside or outside Canada should be retained, opposed, or changed.”

Currently, the T3010 provides: “A registered charity may pursue political activities to retain, oppose, or change the law, policy, or decision of any level of government inside or outside Canada provided the activities are non-partisan, related to its charitable purposes, and limited in extent.”


As a result of changes to the T3010 there will also be changes to the Guide T4033, Completing the Registered Charity Information Return which will include in depth explanations and examples that deal with C5 and Schedule 7.


CRA reminded Canadian registered charities of new tools to ensure compliance with the political activity as well as other requirements. 

First, there is now a 1 year suspension of receipting privileges for devoting more resources to political activities than legally allowed or carrying out partisan political activities. 

Second, CRA can suspend receipting privileges if a charity “fails to report information that is required to be included in its annual information return, including political activities, until the deficiency is corrected.”  This second change affects any charity, including those who don’t do political activities.

Third, the Charities Directorate will be conducting more education and compliance activities related to political activities.  However, CRA’s approach to political activities will be no different than any other compliance issue – the CRA uses a compliance continuum starting with education first and then moving to monitoring and audit and then revocation.


Some other developments that may be of interest

The CRA is planning on putting out the following guidances:

Arts Activities and Charitable Registration in late 2012
Protection of the Environment and Charitable Registration in 2013
The Promotion of Health and Charitable Registration in 2013