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CONSULTATION PANEL RELEASES REPORT CALLING FOR SWEEPING CHANGES TO THE CRA FRAMEWORK FOR CHARITIES’ POLITICAL ACTIVITIES CHARITIES

Posted on Tuesday, May 09, 2017

The Honourable Diane Lebouthillier, Minister of National Revenue, issued a news release announcing the Panel Report from the Consultation Panel on the Political Activities of Charities.  The Panel was appointed by Minister Lebouthillier in September 2016 to provide recommendations for clarifying the rules that govern the participation of charities in political activities. The Panel considered feedback from consultations with the charitable sector and the public, conducted online and in-person from October to December 2016.

The Report provides four recommendations:

1. Revise the CRA’s (Canada Revenue Agency) administrative position and policy (including CPS-022, Political Activities) to enable charities to fully participate in public   policy dialogue and development.

Recommendation 1 further specifies that CRA should revise its policy guidance to:

  1. explicitly allow the engagement of charities in public policy dialogue and development in furtherance of charitable purposes by providing information, opinions, advocacy etc.;
  2. remove the policy requirement that a charity’s materials must reflect all sides of the argument, and add that they must be fact-based;
  3. retain the prohibition on "partisan political activities" while removing the "direct or indirect" qualification; and   
  4. amend CRA Form T3010 to remove the requirement to quantify resources used for political activities, and replace it with a requirement to describe, in narrative form, the nature of the public policy dialogue and development work undertaken.

This recommendation is intended to address concerns in the charitable sector regarding current limitations on engaging in political activities until further legislative amendments are made.

1. Implement changes to the CRA’s administration of the Income Tax Act (ITA) provisions governing charities in the following areas: compliance and audits, appeals, and communication and collaboration.

Recommendation 2 outlines methods to improve trust and collaboration between CRA and the charities sector by providing greater communication, transparency, and certainty about the compliance and audit processes. Furthermore, this recommendation suggests improving CRA’s internal consistency, within and across units, when providing information and advice.

2. Amend the ITA 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.

Recommendation 3 provides the following proposals for the anticipated amendments:

  1. retain the current legal requirement that political purposes are not charitable and that charities must be constituted and operated exclusively for charitable purposes;
  2. support the engagement of charities in non-partisan public policy dialogue and development in furtherance of charitable purposes, while retiring the term “political activities” and providing a clear meaning for “public policy dialogue and development”;
  3. retain the prohibition on charities engaging in “partisan political activities” and remove the prohibition on “indirect” support. 

This recommendation is aimed at clarifying the current legislative framework governing the charitable sector until it can be modernized.

1. Modernize the legislative framework governing the charitable sector.

Recommendation 4 proposes the new legislative framework should focus on charities’ purpose, rather than activities and include a list of charitable purposes reflecting contemporary social and environmental issues and values.  This recommendation suggests providing charities with the ability to appeal a refusal to register or a revocation decision to the Tax Court of Canada, instead of the Federal Court of Appeal.  Finally, recommendation 4 proposes the removal of the need for “direction and control” of non-qualified donees in certain circumstances and accommodation of the use of social enterprise and social finance models.  The purpose of this recommendation is to recognize the critical role played by charities in Canadian society and to remove barriers to charitable activities.

In response to the Panel’s Report, Minister Lebouthillier instructed CRA to suspend all action relating to the remaining audits and objections that were part of the Political Activities Audit Program. The Minister’s news release stated:

The Report indicates that “numerous consultation submissions noted that this program has resulted in a pervasive “chill” on the public policy and advocacy activities of charities”. This suspension will be in effect until the government officially responds to the Panel’s report.

This Report appears to be a positive step towards clarifying the ability of registered charities to engage in political activities in support of their charitable purposes and modernizing the current legal framework.  De Jager Volkenant & Company will publish a comprehensive assessment of the Report shortly.

For more information, the full report can be found here.

 

 

 

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