( Disponible en anglais seulement )
On Sept 14, 2018, the Department of Finance released draft legislation proposing amendments to the provisions in the Income Tax Act (Canada) (the “Act”) that deal with political activities by registered charities and registered Canadian amateur athletic associations (“RCAAAs”). This draft legislation, which is accompanied by a backgrounder, is open for comment until October 13, 2018.
The draft legislation does the following:
- deletes references to “political activities” from section 149.1 of the Act, and removes the provisions that have been interpreted to provide for a limit on the resources that a registered charity or RCAAA can devote to non-partisan political activities;
- provides that registered charities and RCAAAs will continue to be prohibited from engaging in partisan activities; and
- revises the definition of “charitable organization” to confirm that charitable organizations, like charitable foundations, must be constituted and operated for exclusively charitable purposes.
The draft legislative proposals would apply retroactively to the charity audits and objections that are currently suspended. The government previously announced that these suspensions would be lifted once the new legislation is passed.
The draft legislation follows on the Report of the Consultation Panel on Political Activities released on March 31, 2017. We commented on the report here. The Report made several recommendations, including that the government “amend the [Income Tax Act] by deleting any reference to non-partisan ‘political activities’ to explicitly allow charities to fully engage, without limitation, in non-partisan public policy dialogue and development, provided that it is subordinate to and furthers their charitable purposes. »
The draft legislation also follows on the heels of the decision of the Ontario Superior Court of Justice in Canada Without Poverty v. Attorney General (Canada), which was released on July 16, 2018. In that decision, Justice Morgan declared that the provisions in the current legislation that restrict the quantity of non-partisan political activities by registered charities violate the protection of freedom of expression in the Canadian Charter of Rights and Freedoms, and are of no force and effect. We reported on this decision here. The government filed an appeal to that decision on August 15, 2018. The draft legislation and backgrounder do not refer specifically to the case.
This legislation, if passed as proposed, will significantly expand the ability of registered charities to engage in non-partisan political activities in furtherance of their charitable purposes.
As noted, the consultation period for this draft legislation is open until October 13, 2018. Comments can be sent to firstname.lastname@example.org. Written correspondence related to these consultations can also be mailed to:
Tax Policy Branch
Department of Finance Canada
90 Elgin Street
We will continue to monitor developments on this issue and will keep our readers informed.