Canadian Charities take note: a fundamental shift has occurred in how the Canada Revenue Agency regulates political activities, one that may significantly change the way that charities engaged in non-partisan political activities structure themselves and operate.
Though punctuated by the Trudeau government’s recent decision to drop its appeal against a 2018 court ruling that struck down limits against political activities by charities under the Income Tax Act, this change was years in the making, stretching all the way back to a series of politically-motivated audits initiated by the Harper administration in 2012. Canada Without Poverty, one of the charities targeted by these audits, decided to launch a legal challenge in 2016, arguing that limits on political activities by charities amounted to a violation of freedom of expression under the Charter of Rights.
They won their case in 2018, and with the Trudeau government’s decision to give up on its appeal, the previous 10 percent limit on a charity’s political activities is now a thing of the past. As of last December, the government passed Bill C-86, which permits charities to “carry on unlimited public policy dialogue and development activities (PPDDAs) in furtherance of a stated charitable purpose.”
But what does this mean for Canada’s 85,000 charities?
A key resource for charities attempting to navigate the new landscape is CG-026, a draft guidance released by the Canada Revenue Agency (CRA) on January 21, 2019.
The document outlines the new developments in Canadian charity law. Here are some of the more salient ones:
- The previous term of “political activities” has been replaced with the concept of “public policy dialogue and development activities” (PPDDA). (The question of what constitutes political activity has always been a contentious one, and the issue came to a head during the audits of the Harper era).
- Permitted PPDDAs by charities now include any of the following: informing the public on matters of public policy (so long as the information is truthful and accurate); conducting research into public policy; disseminating opinions; conducting advocacy, mobilizing the public in support or opposition of a law, policy, or decision; providing forums for discussion; and communicating on social media.
- The Income Tax Act still prohibits charities from devoting resources to supporting a particular political party or candidate. The guidance includes definitions of what constitutes a candidate, political party, and public office.
The new guidelines aim to reduce the previous ambiguity surrounding what is and isn’t permitted in terms of political activities by a Canadian charity. But despite the efforts of the Canadian tax authorities, some level of uncertainty remains. For example, the line between public policy and the politicians who advance it isn’t always clear-cut, especially for a large charity conducting a complex communications strategy across numerous mediums.
The CRA’s draft guidance includes hypothetical examples meant to illustrate the difference. In one case, a charity publishes the policy positions of all political parties on its website. This would be allowed, even if it were obvious to the audience which party is for and against the charity’s preferred course of action, so long as all of the information is laid out in a neutral fashion. However, if said charity, for example, puts red “X”s next to certain parties, it would violate the prohibition against partisan political campaigning.
Nick Wright is a Toronto-based
lawyer with extensive experience assisting Canadian charities and not-for-profit
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