On January 20, 2016, the Honourable Diane Lebouthilier, Minister of National Revenue (the “Minister”), announced that the Canada Revenue Agency (“CRA”) will commence winding down its review of political activities of registered charities.

Minister Flaherty announced in the 2012 Budget that the Government would be providing funding to the Charities Directorate for two matters: enhanced audits of the political activity of charities, and amendments to the T3010 to enhance reporting of political activities by charities.

With this funding, CRA commenced a political activities audit program proposing to audit 60 charities over a 4-year period. To date, CRA has completed a total of 30 of the political activities audits and confirmed that it will complete another 24 political activities audits that are currently in process. Another six charities were already selected to be audited, but the announcement confirmed that CRA will not proceed to audit them under the political activities audit program.

The audits that have been concluded revealed that charities were substantially compliant with the rules on political activities. Of the 30 completed audits, CRA decided to revoke the charitable registration of only five charities. These revocations were primarily as a result of factors that went beyond the involvement of the charities in political activities.  As a result of the outcomes of the audits, the Minister has determined that the political activities audit program should be terminated.

The Minister also stated that the Government of Canada recognizes the role charities play in Canadian society and that they provide valuable contributions to public policy and public debate. The winding down of the political activities audit program is assurance to charities that the Government respects the contributions they make to these areas.

The Minister announced that, going forward, CRA will provide further guidance to the sector to clarify the rules that govern registered charities’ involvement in political activities.

The Minister also announced that the Government of Canada’s commitment to openness and transparency requires the Government to provide more information to the public on the regulation of the sector. In order to meet this commitment, CRA will start publishing an annual report on its activities and how it contributes to the effective regulation of registered charities.