Canada without Poverty Decision Appealed and Federal Government announces changes to the Political Activities Rules in the Income Tax Act

News Alert: August 17, 2018 | Susan M. Manwaring

Readers will recall seeing our summary of the recent decision of Justice Morgan in Canada Without Poverty v. AG Canada  –  a Charter decision in which Canada Without Poverty (“CWP”) argued that the provisions of the Income Tax Act (Canada)(“ITA”) restricting “political activity” unduly restricted its freedom of expression in a way that limited its ability to achieve its charitable purpose.  Justice Morgan agreed and struck down the sections of the ITA that contained that restriction while retaining the prohibition on partisan politics.

Many were surprised at the decision – and most were not surprised yesterday at the announcement that the Federal Government is appealing.  The appeal was filed at the same time that the Government announced it would introduce legislation in the Fall session to, in effect, change the ITA to do exactly what Justice Morgan did in the CWP decision.  The Government will remove the limits on “political activity” while retaining the prohibition on partisan activity and confirming that to be a charity, an organization needs exclusively charitable purposes and cannot have a political purpose.

In the announcement, the Ministers of Finance and National Revenue confirmed that they agreed with the result but not necessarily the logic and rationale written by Justice Morgan.  They stated:

“With regard to the decision in Canada Without Poverty v the Attorney General of Canada, rendered on July 16, 2018, the Government of Canada has identified significant errors of law and has served notice that it will be appealing the decision to address the uncertainty created by it, and to seek clarification on important issues of constitutional and charity law. The resolution of these legal issues, while necessary, will not change the policy direction the Government intends to take with respect to the removal of quantitative limits on political activities.”

With respect to the legislative change proposed, Ministers Morneau and Lebouthieller referred to the Report of the Consultation Panel on the Political Activities of Charities:

“As a matter of good public policy, and to move forward with this commitment, our Government intends to amend the Income Tax Act to implement changes consistent with recommendation no. 3 of the Report of the Consultation Panel on the Political Activities of Charities. The intended amendments will allow charities to pursue their charitable purposes by engaging in non-partisan political activities and in the development of public policy. Charities will still be required to have exclusively charitable purposes, and restrictions against partisan political activities will remain.”

In addition to making a commitment to address the concerns around limits on non-partisan advocacy by charities, the Federal Government in its Ministerial mandate letters committed to pursuing a new legislative framework and to modernizing the legislation applicable for non-profit and charitable organizations.  The  commitment to legislative change around political activity will be watched with great anticipation as will the appeal in the CWP decision.  This is a watching brief and Miller Thomson LLP will be providing regular updates and the members of our group are available to assist you in understanding the public policy advocacy rules as they develop.

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