By Ryan M. Prendergast and Terrance S. Carter

Many in the charitable sector may be disappointed that the Taxpayers’ Ombudsperson, François Boileau, has not been able to comprehensively review the Canada Revenue Agency’s (CRA) audit selection process, following allegations of anti-Muslim bias against the agency. The Ombudsperson’s report detailing his office’s review of the CRA’s treatment of Muslim charities was published on March 27, 2023, and clearly stated that his office was not provided with sufficient information to carry out the review it had been tasked with. The Ombudsperson had previously provided a statement on November 21, 2022, noting that his office may not succeed in analyzing the CRA’s audit selection process because of the CRA’s practice to not disclose certain information, particularly regarding its risk assessment process, due to national security concerns, as summarized in more detail in Carters’ January 2023 Charity & NFP Law Update. In the March 27 report from the Ombudsperson entitled “Charity Begins with Fairness: More to Explore”, the Ombudsperson confirmed that his office had not been able to conduct a complete review.

Some relevant quotes from the report are included below:

• “we have not been able to sufficiently address two of the areas that the Minister asked us to pay special attention to, particularly regarding the [Review and Analysis Division] RAD’s activities, including:

1.  the selection of files for audit

2.  the quality of services provided to organizations that are audited”

• “While we did have access to compliance action approach letters for charities who were penalized, suspended, or had their registration revoked, they were redacted, and we did not have access to the supporting documents that informed the decisions in the letters.”
• “What we heard and found was not enough to provide us with a full picture of how the RAD and the Compliance Division select charities for audit.”

The Taxpayers’ Ombudsperson was, however, able to offer one recommendation in the report, namely that the CRA create an unconscious bias training course for CRA employees of the Charities Directorate and make the course mandatory for all employees involved in the audit process. This recommendation came as a result of the Ombudsperson’s observations that statistics provided to his office by the CRA identified “that the completion rates for unconscious bias training taken by RAD employees was low”. He noted that there was a stigma associated with CRA employees expressing that they have known biases which “could explain why employees we interviewed said they had none.” Therefore, the Ombudsperson was of the opinion that destigmatizing unconscious bias through open communication or other methods could help make efforts to address unconscious bias at the CRA more effective.

It is disappointing that the Taxpayers’ Ombudsperson was not provided with the information required to provide a review of RAD’s activities, particularly with regard to the selection of files for audit and the quality of services provided to organizations that are audited. It is hoped that the National Security and Intelligence Review Agency’s review (as explained in more detail in the article here) will be much more comprehensive and will be able to provide Canadians with a picture of the work of RAD in relation to charity audits, particularly the audits of Muslim charities.

​Read the March 2023 Charity & NFP Law Update