Having been given cover by an independent group of charity practitioners’ Report, the government has abandoned all aspect of the “project” of the CRA examining charity political activities.

Last September, the Minister of National Revenue launched a consultation process with the charitable sector and the public to assist in clarifying the rules for the participation of charities in political activities, and announced the creation of a Panel to provide recommendations using feedback from the consultations, we were sceptical.

The Panel’s Terms of Reference, while largely focused on administrative improvements, included, to the extent that CRA receives proposals beyond those that are purely administrative, a mandate to review those areas and report on them. We were concerned that if all that happened was that the CRA tweaked its administrative policies, there would be little improvement in the almost toxic environment involving charities a public discourse.

Now that the Report[1] is out, we feel much more comfortable…but remembering history[2] we are withholding final judgement.

But the immediate good news is that the CRA seems to have completely abandoned the political activities audit programme, this time including with regard to those organizations which are under audit and those who have launched objections to audit results.

“As an immediate first step to respond to the Panel’s recommendations, Minister Lebouthillier has asked the CRA to suspend all action in relation to the remaining audits and objections that were part of the Political Activities Audit Program, initiated in 2012. The Report indicates that “numerous consultation submissions noted that this program has resulted in a pervasive “chill” on the public policy and advocacy activities of charities”. This suspension will be in effect until the government officially responds to the Panel’s report.”[3]

According to the CBC a spokeswoman for the minister, Chloe Luciani-Girouard, said the suspension affects 12 audits, of which seven have resulted in an intention to revoke charitable status.

The Liberal party campaigned in the 2015 election to end the “political harassment” of charities, but once elected did not quite end the program. Instead, it cancelled six of the political-activity audits that were yet to be launched, but allowed audits underway to continue. That left groups such as Environmental Defence and Canada Without Poverty, which were deemed too political by CRA, still under immediate threat of losing their charitable status. The announcement lifts that threat, at least until the government responds to the panel recommendations.

So there were short term gains which had to be welcomed. As we write this, many law firms are waiting to see what will happen with other audits being carried out which may or may not be categorized as “political”. In one case, the lawyers for the charity were told that the audit has been “suspended” but the contact person was unwilling or unable to explain precisely what this meant.

We were particularly pleased with the Report itself which contained a range of proposals, all of which we agree with. Most notably:

“The Government of Canada, in consultation with the charitable sector, should proceed, as soon as possible, to modernize the rules governing the charitable sector through the development of a new legislative framework. The Panel recommends that a new legislative framework include:

  1. a focus on charities’ purposes, rather than activities;
  2. an inclusive list of charitable purposes reflecting contemporary social and environmental issues and values; and
  3. the ability to appeal a refusal to register and revocation decisions to the Tax Court of Canada.”

(In our view this is a hugely desirable proposal…one which was recommended as part of the VSI exercise and never acted upon. Historically, the Department of Finance has been hostile to the idea and has testified to this effect before the Commons Finance Committee a couple of years ago.)

Now we are left with a situation where we shall just have to wait to see which, if any, proposals make it into legislation.