Federal Court of Appeal Denies Registration to News Organization

July 25, 2011 | Robert B. Hayhoe

In June, the Federal Court issued its decision in News To You Canada v. Minister of National Revenue in which it denied the organization’s appeal of the Canada Revenue Agency’s refusal to register it as a charitable organization.  This decision, while consistent with the Court’s pattern of upholding virtually all decisions of the Charities Directorate, is perhaps surprising in that the Court has engaged the Charity’s arguments in a way that is not always evident in registration appeals.

News to You was incorporated with the purpose “to fund, develop and carry on activities to research and produce in-depth news and public affairs programs designed to provide unbiased and objective information concerning significant issues and current events that are relevant to a large sector of the general public and to disseminate these programs by publishing, broadcasting, cable, satellite, Internet and any other distribution method available now or developed in the future in order to encourage a well-informed general public for the benefit of society.”

The organization argued that it was charitable because it advanced education and also by analogy to other recognized purposes beneficial to the community.

The Court concluded that the organization was not educational.

Though I agree that the production and dissemination of in-depth news and public affairs programs may improve the sum of communicable knowledge about current affairs, such activities are not sufficiently structured for educational purposes. The appellant’s audience is merely being offered news and public affairs content. This may provide an opportunity for that audience to improve its knowledge of current affairs, but this offering is, at best, nothing more than the provision of an opportunity for individuals to educate themselves through the availability of materials with which this might be accomplished, but need not be.

The Court also distinguished an earlier case concluding that the Native Communications Society of BC was charitable as a publisher of a native focussed newspaper and similarly focussed broadcaster, by deciding that the case ought to be limited to natives, given their special legal status.  Similarly, the Court distinguished a case finding the Vancouver Freenet to be charitable by observing that the Freenet was infrastructure, not merely content.

Fundamentally, the Court seemed to have been concerned with expanding what it views as the charitable giving tax expenditure.  As a result, the Court suggested that any reputable news outlet would subscribe to the organization’s purposes.  With all respect to the Court, this confuses the concept of a charitable purpose.  A for-profit news outlet has the legal purpose of making a profit, albeit through the activity of providing news coverage.  A non-profit news outlet has, as a matter of law, the news as its purpose, not merely as its activity.  Thus, the concern about tax loss should not have been a concern here (even if it is ever a proper consideration for the Court in deciding charitable status).

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