Apr 2019 Charity & NFP Law Update
On March 7, 2019, the Minister of National Revenue issued its response (the “Response”) to the Report of the Consultation Panel on the Political Activities of Charities published in May 2017 (the “Report”). The Report provided various recommendations on the administrative and legislative framework governing political activities at the time, discussed in Charity & NFP Law Bulletin No. 403. While the Federal Government had committed to providing a formal response in 2017, that timeline was not kept. However, although an official written response was not provided, the government did take various steps in response to the recommendations in the Report. The Response now marks the government’s final response to each of the four recommendations outlined in the Report.
Recommendation 1 is to “revise the CRA’s administrative position and policy.” The Response points to the draft guidance on public policy dialogue and development activities (“PPDDAs”), discussed in Charity & NFP Law Bulletin No. 438, for which the CRA is currently accepting feedback.
Recommendation 2 is to “implement changes to the CRA’s administration of the Income Tax Act (ITA).” The Response indicates that funding of up to $5.3 million is being provided over the next five years to the CRA for enhanced sector outreach and education. The CRA has also implemented the Charities Education Program. Further, the Response states that the additional administrative changes and initiatives will be made, such as new communication and engagement methods, and updating its webpages that discuss the audit process and other topics of interest to Indigenous communities.
Recommendation 3 is to “amend the [ITA] by deleting any reference to non-partisan political activities to explicitly allow charities to fully engage without limitation in [PPDDAs].” The Response points to the legislation introduced through Bill C-86, Budget Implementation Act, 2018, which implemented the PPDDA regime, also discussed in Charity & NFP Law Bulletin No. 438. It further indicates that the suspension on the Political Activities Audit Program has been lifted and that affected charities will be contacted by the CRA. Finally, the Response also states that, as a result of the Bill C-86 amendments, the government has discontinued its appeal in the Canada Without Poverty v AG Canada decision, discussed in Charity & NFP Law Bulletin No. 425.
Recommendation 4 is to “modernize the legislative framework governing the charitable sector.” The Response states that the government is establishing a permanent Advisory Committee on the Charitable Sector, as discussed in the March 2019 Charity & NFP Law Update. $3.2 million in new funding will be provided to the CRA over the next five years to support this initiative.
While the Response has been long-awaited, it is clear that the government has taken the recommendations of the Report into consideration through various government initiatives. The Response therefore brings a certain degree of finality to the debate over political activities and the evolution of PPDDAs over the last two years, and provides a helpful overview of the work that the government has undertaken in response to the Report.