In his November 2015 Mandate Letter to the Minister of National Revenue, Diane Lebouthillier, Prime Minister Trudeau mandated her to work to “modernize” Canada’s charity law and clarify the rules in the Income Tax Act that deal with political activities. Budget 2016 confirms the Government’s commitment to take on the task of clarifying the political activity rules. More specifically, the Budget announced that the “Canada Revenue Agency, in consultation with the Department of Finance, will engage with charities through discussions with stakeholder groups and an online consultation to clarify the rules governing the political activities of charities.” No further information was provided in the Budget about the process.
The November 2015 Mandate Letter also stated that the Minister should “allow charities to do their work on behalf of Canadians free from political harassment … with an understanding that charities make an important contribution to public debate and public policy.” Leading up to this announcement, the Canada Revenue Agency had been carrying out a formal audit program, the focus of which was to look at charities’ political activities. No comments on the audit program were made in the Budget.
The budget is arguably consistent with the Government’s commitment to allow charities to work free from political harassment. The specifics of any clarification or revision to the rules around political activities of course remain to be seen. Charities should watch for public consultations on this topic. We will continue to follow developments in this area and will report on them in our Newsletter.