Government Response to the Report of the Consultation Panel on the Political Activities of Charities

On March 7, 2019, the Minister of National Revenue responded to the Report of the Consultation Panel on the Political Activities of Charities and the following recommendations:

Recommendation 1: Revise the Canada Revenue Agency’s (CRA) administrative position and policy

The CRA has developed and published a draft guidance for public consultation to explain how it will administer the new rules on public policy dialogue and development activities of charities (see Recommendation 3 below). The CRA is accepting feedback on the draft guidance until April 23, 2019.

Recommendation 2: Implement changes to the CRA’s administration of the Income Tax Act (ITA)

The Government is providing up to $5.3 million in new funding over the 2018–2019 to 2023–2024 period for the CRA to enhance sector outreach and education. This will include reinstating in-person information sessions and introducing videoconference information sessions for charities across Canada.  The CRA will also strengthen its internal training for employees to ensure policies are implemented consistently, and will update relevant forms to reflect the new public policy dialogue and development rules.

The CRA has launched the Charities Education Program, conducting in-person visits with registered charities to provide them with support and guidance in meeting their obligations and maintaining their registered status.

The CRA will continue to make other administrative changes and to develop initiatives that align with the Panel Report, including:

• exploring new methods to communicate and engage with the sector;
• updating webpages on the audit process; and,
• reviewing and updating webpages that focus on topics of greatest interest to Indigenous communities.

Recommendation 3: Amend the Income Tax Act by deleting any reference to non-partisan political activities to explicitly allow charities to fully engage without limitation in public policy dialogue and development activities

Changes to the rules governing charities’ political activities were included in Bill C-86, Budget Implementation Act, 2018, No. 2, which received Royal Assent on December 13, 2018. These changes explicitly allow charities to fully engage without limitation in public policy dialogue and development activities, provided they are carried on in furtherance of a stated charitable purpose and do not support or oppose, either directly or indirectly, a political party or candidate for public office.

Now that the Government has responded to the Panel Report, the suspension of the remaining audits and objections that were part of the Political Activities Audit Program, initiated in 2012, is lifted. The CRA will contact the affected charities to discuss their outstanding audits and objections.

The Government has also decided to discontinue its appeal of the decision in Canada Without Poverty v. AG Canada because the legislative provisions at issue in the litigation are no longer applicable following the above mentioned changes.

Recommendation 4: Modernize the legislative framework governing the charitable sector

The Government is establishing a permanent Advisory Committee on the Charitable Sector (ACCS). The ACCS will provide recommendations to the Minister of National Revenue and the Commissioner of the CRA on important and emerging issues facing charities and qualified donees on an ongoing basis.

Hilary Pearson and Bruce MacDonald have accepted to be the ACCS’ first sector co-chairs. They will join the CRA co-chair, Geoff Trueman, Assistant Commissioner of the Legislative Policy and Regulatory Affairs Branch and 12 other members from the charitable sector and the Government.

The Government is providing $3.2 million in new funding over the 2018–2019 to 2023–2024 period to the CRA to support the ACCS to strengthen the relationship between the government and this important sector.

Quick facts

• The legislative amendments contained in Bill C-86 replace the Income Tax Act provisions relating to the non-partisan political activities of charities, including the provision that effectively limited charities to devoting only 10 per cent of their resources to non-partisan political activities.
• This new legislation provides that charitable activities include, without limitation, public policy dialogue and development activities carried on in furtherance of a stated charitable purpose.
• The legislation maintains the prohibition on charities providing direct or indirect support to, or opposition to, a political party or candidate for public office.
• The legislation clarifies that charitable organizations, like charitable foundations, must be constituted and operated for exclusively charitable purposes.
• The legislation applies retroactively to all charities that were registered as of September 14, 2018.

Timeline

• Fall 2016: The CRA held online and in-person consultations.
• September 2016: The Consultation Panel was established.
• May 2017: The Minister welcomed the Panel Report on the public consultations on charities and political activities and asked the CRA to suspend all action related to the remaining audits and objections under the Political Activities Audit Program.
• August 2018: Statement by the Minister of Finance and Minister of National Revenue on removing restrictions on political activities of charities.
• October 29, 2018: New legislation was tabled.
• November 21, 2018: The government announced the creation of a new permanent Advisory Committee on the Charitable Sector (ACCS) as part of Fall Economic Statement 2018.
• December 13, 2018: New legislation received Royal Assent.