CRA Releases Draft Guidance on New Rules Permitting Charities to Engage in ‘Public Policy Dialogue and Development Activities’

January 23, 2019 | Natasha Smith

Over the past couple of years, we have been following the issues that have arisen with the provisions in the Income Tax Act (Canada) (“ITA”) concerning the rules that govern the form of advocacy or “political activities” that a charity can pursue.  Most recently, we commented on the draft legislation the Department of Finance released in September 2018 to implement certain changes to the rules around charities’ ability to engage in public policy and debate, as found in the ITA.

On October 25, 2018, Finance Minister Bill Morneau tabled a Notice of Ways and Means motion to implement specific provisions of the 2018 federal budget. The motion adopted rules governing public policy dialogue and development that were even more progressive than those released in September 2018.  On December 13, 2018, the Budget Implementation Act, 2018, No. 2 received Royal Assent and the new legislation became law.

The new rules adopt Recommendation #3 from the Report of the Consultation Panel on Charities and Political Activities (the “Panel”).  The term “political activities” is replaced with the concept of ‘public policy dialogue and development’ and the new legislation removes the “substantially all” limitation.  For clarity the ITA was revised to include a provision that effectively removes the distinction between ‘nonpartisan political activities’ and ‘charitable activities’ by confirming that ‘public policy dialogue and development’ would be included in the definition of ‘charitable activities’.

The result is that the new legislation makes the rules more straightforward.  Rather than limiting the amount of ‘political activities’ in which an organization can engage and leaving it to the organizations to try to determine whether advocacy in pursuit of a charitable purpose is “political” and whether they have crossed the 10% threshold, the new rules permit advocacy pursued in support of an otherwise charitable purpose.  The only restriction now is that any organization that engages in the direct or indirect support or opposition to a political party or candidate (previously referred to as “partisan political activities”) will be found in breach of the requirement that a charity operate exclusively for charitable purposes.

The effective dates for each of the new rules are retroactive and vary from 2008 to 2018.  A special nod must be given to the Panel, which initiated the recommendation to make these changes and of which Miller Thomson’s Susan Manwaring was a part, as the changes reflect recommendations made by the Panel.

The new legislation was a welcomed win prior to the new year but there remained some question as to how the Canada Revenue Agency (“CRA”) would administer the new rules.  The Sector eagerly awaited guidance from CRA.

On January 21, 2019, CRA released draft administrative guidance CG-027 “Public policy dialogues and development activities”, which sets out how CRA will proceed to interpret the new rules.  CG-027 is summarized below, though we note that CRA is accepting feedback on the guidance until April 23, 2019.

A stark contrast from the previous CRA policy which differentiated between “charitable activities”, “permitted political activities”, and “prohibited political activities”, CG-027 distinguishes between activities that are considered to be “public policy dialogue and development activities” (CRA terms these PPDDAs) – which are permitted – and activities that are considered to “support or oppose a political party or candidate” – which are prohibited.


PPDDAs are the activities a charity carries on to participate in the public policy development process, or facilitate the public’s participation in that process.  CRA defines public policy as the laws, policies, or decisions of a government, in Canada or a foreign country.  PPDDAs include:

Providing information – charities may provide information to their supporters or the general public related to their charitable purposes (including the conduct of public awareness campaigns) in order to inform or persuade the public in regards to public policy. Such information must be truthful, accurate, and not misleading.

Research – charities may conduct research into public policy, distribute the research, and discuss the research and findings with the media and with others as they see fit.

Disseminating opinions – charities may express opinions on matters related to their charitable purposes to participate in developing public policy, as long as they draw on research and evidence and are not contrary to hate speech laws or other legitimate restrictions on freedom of expression.

Advocacy – charities may advocate to keep or change a law, policy, or decision, of any level of government in Canada, or a foreign country.

Mobilizing others – charities may call on supporters or the general public to contact politicians of all parties to express their support for, or opposition to, a particular law, policy, or decision of any level of government in Canada or a foreign country.

Representations – charities may make representations in writing or verbally to elected officials, public officials, political parties, and candidates, and appear at parliamentary committees, to bring their views to the public policy development process, and may release such materials publicly.

Providing forums and convening discussions – charities may invite competing candidates and political representatives to speak at the same event, or may request written submissions for publication, to discuss public policy issues that relate to the charity’s purposes.

Communicating on social media – charities may express their views, and offer an opportunity for others to express their views, in regards to public policy, on social media or elsewhere.  To this end, however, CRA cautions that where a charity provides a platform for public political commentary, it must monitor and remove messages that support or oppose a political party or candidate for public office.

Importantly, charities are only permitted to engage in PPDDAs provided the following criteria are met:

  • the PPDDAs relate to the charity’s stated charitable purpose; and
  • the PPDDAs, when considered together with the charity’s stated charitable purpose, would provide a benefit to the public.

However, charities may not be established for the purpose of engaging in PPDDAs.

Prohibited Activities

Activities which directly or indirectly support or oppose a political party or candidate are partisan and prohibited.  Such activities have always been prohibited under the ITA, however CG-027 aims to bring clarity on the scope of such activities by defining the constituent parts of the prohibition.  For instance, CG-027 includes definitions for the following terms:

  • candidate, which is a person that meets the definition set out in an applicable legislation (i.e., The Canada Elections Act) and which does not include potential candidates
  • political party, which is an organization with a fundamental purpose to participate in public affairs by endorsing one or more of its members as candidates and supporting their election
  • public office, which is the House of Commons or a provincial or territorial legislative assembly, national assembly or parliament, band council, regional or municipal government, or similar entity

CRA also makes a distinction (with examples) between direct and indirect support or opposition.  Direct support or opposition occurs where a charity’s external materials (i.e., social media, website, print publications) communicate a message that supports or opposes a political party or candidate to the public or where a charity transfers any of its resources (i.e., financial, human, or physical) to a political party or candidate, or allows a political party to use its resources without compensation.  Indirect support or opposition occurs where a charity’s records (i.e., meeting minutes, planning documents, etc.) explicitly reveal that it carried on an activity to support or oppose a political party or candidate or where a charity transfers any of its resources to a third party, to be used to support or oppose a political party or candidate.

CG-027 also includes guidelines on how representatives of charities may personally support or oppose a political party or candidate without putting the charity offside the ITA.  For instance, CRA states that while representatives of a charity, such as directors, are permitted to involve themselves in political processes in their personal, private capacity, they:

  • must not use the charity’s resources (i.e., office space, supplies, equipment, publications, or human resources) to support their personal political involvement;
  • must not use events or functions organized by the charity as a platform to voice their own political views; and
  • are encouraged to indicate that their comments are personal rather than the view of the charity.

Notably, the receipt of a gift from a political party or candidate or the promotion of a charity by a political party or candidate is permitted and will not put the charity offside the PPDDAs rules.  Similarly, a charity’s mere agreement or disagreement with a decision or position of government will not result in a breach of the ITA.

Given the new rules and CRA guidance, charities are well-advised to revisit their policies on political advocacy, which policies may now be overly restrictive given the new rules.  Lawyers of Miller Thomson’s Social Impact Group would be pleased to assist your organization in reconstituting its policies around participation in public policy dialogue and development.


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