There continue to be more developments in relation to the political activities of Canadian charities. On October 25, 2018, the Department of Finance (Finance) introduced new proposed amendments to the Income Tax Act (Canada) that would impact the political activities of registered charities (Proposed Amendments). Explanatory notes describing the Proposed Amendments were also published (Explanatory Notes). The Proposed Amendments received second reading in the House of Commons on November 6, 2018 and were referred to the Standing Committee on Finance.
What Has Happened So Far?
Finance previously released draft legislative proposals on September 14, 2018 to remove the quantitative limits on the non-partisan political activities of charities (Previous Draft Amendments), which you can read about in our September article. The publication of the Previous Draft Amendments was followed by a 30-day public consultation period and, as a result of the feedback solicited through this process, the Proposed Amendments were introduced to replace the Previous Draft Amendments.
In the interim, on October 2, 2018, the Canada Revenue Agency (CRA) published a draft guidance, Charities and public policy advocacy, (Draft Guidance) that described how the CRA would interpret, administer and enforce the Previous Draft Amendments, which you can read about in our October article. As a result of the Proposed Amendments, the CRA removed the Draft Guidance from its website and has indicated that it will release updated details on its administration of the Proposed Amendments by the end of 2018 (Revised Guidance).
Summary of Changes
If passed, the Proposed Amendments would allow registered charities to engage in unlimited public policy dialogue and development activities in support of their charitable purposes (Public Policy Activities). According to the Explanatory Notes, Public Policy Activities “generally involve seeking to influence the laws, policies or decisions of a government, whether in Canada or a foreign country.”
The Proposed Amendments provide that Public Policy Activities carried on in furtherance of a charity’s purposes will be considered to further those purposes and not any other purposes (that is, they will not further political purposes). The prohibition on charities engaging in partisan political activities (that is, “the direct or indirect support of, or opposition to, any political party or candidate for public office”) is maintained under the Proposed Amendments.
So What Now?
So where does this leave Canadian registered charities? On a positive note, the Proposed Amendments remove certain provisions under the Previous Draft Amendments that were likely to cause confusion, and place fewer restrictions on charities in terms of their Public Policy Activities. However, unless and until the Proposed Amendments become law and the Revised Guidance is published, charities should continue to proceed with caution before fully revamping the way that they carry out their political activities and/or Public Policy Activities.