By Terrance S. Carter, Adriel N. Clayton and Lynne Westerhof

Bill C-41 Amending the Criminal Code Being Considered in House of Commons

Bill C-41: An Act to amend the Criminal Code and to make consequential amendments to other Acts is at the time of writing being reviewed by the House of Commons Standing Committee on Justice and Human Rights after having completed second reading on March 27, 2023. Previously discussed in detail in AML/ATF and Charity Law Alert No. 51, Bill C-41 seeks to amend Canada’s anti-terrorist financing (“ATF”) regime to allow for the delivery of aid, immigration activities and other assistance to areas of the world under the control of terrorist groups. Under the current iteration of the Criminal Code, charities cannot provide assistance to people in these areas without being in violation of the Criminal Code by making available property knowing that it will be used by or will benefit a terrorist group contrary to section 83.03(b) of the Code.

For example, with the current situation in Afghanistan, which has been controlled by the Taliban since 2021, Canadians have not been able to provide aid to those in that country, as this would inevitably be taxed by the Taliban and constitute funding a terrorist organization. The new proposals will amend the Criminal Code to allow for life saving aid to be rendered by adding an exception to the legislation so that section 83.03(b) will not apply to a person who has been granted an authorization under the proposed new section 83.032 of the Code.

Bill C-41 comes after much lobbying by the charity and not-for-profit sectors. If passed, this will allow organizations to deliver much needed aid to Afghanistan and other geographic areas under the control of terrorist organizations. The government has stated it will provide a guidance to potential applicants if the Bill becomes law, and that it will prioritize processing applications in a timely manner to ensure aid is delivered to assist those who need it most. However, concerns about Bill C-41 have been articulated in our AML/ATF and Charity Law Alert No. 51, linked to above. Hopefully those concerns will be addressed during the House of Commons Committee study of Bill C-41, or if not, then in the Senate.

Bill C-47, Budget Implementation Act Completes First Reading in House of Commons

Bill C-47, Budget Implementation Act, 2023, No. 1 (the “BIA”) was in second reading in the House of Commons at the time of writing on April 27, 2023. The BIA will implement certain provisions of the 2023 Federal Budget tabled on March 28, 2023 and other provisions previously put forward in draft legislation. For example, the BIA includes the following changes that were proposed in draft legislation released by the Department of Finance on August 9, 2022 (as described in more detail in Charity & NFP Law Bulletin No. 515):

• Amendments to paragraph 149.1(15)(a) of the Income Tax Act (“ITA”), which will allow the Canada Revenue Agency (CRA) to share the filing status of information returns filed by registered charities, registered Canadian amateur athletic associations, and registered journalism organizations. The paragraph already allows the CRA to share with the public prescribed information from these entities that is required to be contained in public information returns. These amendments will be deemed to apply for information returns required to be filed for taxation years that end after August 9, 2022.
• Amendments to subparagraph 149.1(15)(b) of the ITA to allow the CRA to provide information to the public about the effective date of the suspension of any qualified donee (other than His Majesty in right of Canada or a province, the United Nations or an agency of the United Nations). The CRA may already provide the effective date of the revocation, annulment, or termination of these entities. These amendments will be deemed to have come into force on August 9, 2022.
• Amendments to subsection 189(6.1) of the ITA so that a registered charity will be required to file a return when its charitable registration is revoked (instead of when the revoked charity is liable for revocation tax under subsection 188(1.1), as is currently required). A revoked charity will not have to file a return if it is notified that the intention to revoke has been abandoned under subsection 188(2.1). These amendments will be deemed to apply in respect of taxation years that end after August 9, 2022.

The BIA also includes proposed changes to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act announced in Budget 2023 that will “strengthen the investigative, enforcement, and information sharing tools of Canada’s AML/ATF Regime.”

Ontario Proposes Amendments to Trustee Act that will Impact Investments Made by Charities

Pursuant to a proposal announced on April 3, 2023, Bill 91, Less Red Tape, Stronger Economy Act, 2023 was introduced to the Legislative Assembly of Ontario, and has been ordered referred to the Standing Committee on Justice Policy as of April 6, 2023. Bill 91 seeks to amend section 27.2 the Trustee Act (the “Act”). As it currently stands, the Act allows trustees (which would include directors of charities) to invest in mutual funds, pooled funds and segregated funds under variable insurance contracts. Trustees can also delegate investment decision making to an investment manager, but these responsibilities cannot be further sub-delegated. However, there is a lack of clarity in the current wording of the Act, as it does not explicitly allow delegated investment managers to invest in mutual funds, pooled funds and segregated funds under variable insurance contracts.

The proposal to the Act seeks to clarify that such investments are permitted by delegated investment managers. The purpose is to ensure that this position is expressly stated to facilitate easier investing under the Trustee Act. Ontario is currently accepting comments on this proposal.

This amendment is aligned with a proposal submitted by the Ontario Bar Association on May 1, 2017, which was drafted with input from Carters lawyers. It is hoped that the amendment, if passed, will help charities to have confidence in knowing that if they delegate investment power to investment managers those investment managers will have the ability to make investments as a prudent investor would in comparable circumstances as required by the Trustee Act, including the ability to invest in mutual funds, segregated funds as well as segregated funds under variable insurance contracts.

Saskatchewan Government Strengthens Oversight of Independent Schools with New Regulations

The Government of Saskatchewan announced amendments on March 9, 2023 to The Registered Independent Schools Regulations and The Education Funding Regulations, 2018 (“School Regulations”), aimed at strengthening oversight of all registered independent schools in the province. The School Regulations were amended by SR 13/2023, published on March 10 in the Saskatchewan Gazette,  and will include requirements for mandatory administrative policies for independent schools similar to those for Saskatchewan’s public school divisions as well as financial reporting and corporate organization obligations.

Examples of administrative policies that will be required include attendance, extracurricular activities, and a parent complaints and grievances policy.

Registered independent schools will also have to comply with enhanced financial reporting requirements and ensure there is a defined separation of duties among the school board, director, and principal. Further, all qualified independent schools and certified independent schools must be registered as a separate non-profit organization from any parent organization.

Registered independent schools operating in Saskatchewan must comply with the requirements in the amended School Regulations not later than September 1, 2024.

​Read the April 2023 Charity & NFP Law Update