The federal government’s March 29th budget announced that Canada will soon cease to produce and use pennies. Since this announcement, Canadians have been rushing to implement Finance Minister Jim Flaherty solution to fund Canadian charities: “Free your pennies from their prisons at home and donate them to charity.” Many lamented that you will no longer be offered “a penny for your thoughts.”
The fine print in the budget’s Notice of Ways and Means reveals that the government does not want those pennies to be spent on political activities. Weeks before the budget was announced, Senator Doug Finley made the Conservative Party’s political agenda clear when he told the senate, “it should never be considered a charitable act to attack Canada’s oil sands.” The government wants to block funding to environmental charities, particularly those that engage in political activities. Charities play an important role in helping Canadians form value judgments about the merits and flaws of proposed social, economic and environmental plans and solutions. The proposed amendments to the Income Tax Act are intended to reduce the flow of pennies that support these important voices in public discourse. Canadians need to recognize that the government is much more intent on extinguishing “thought” in the charitable sector than extinguishing the penny in everyday commerce.
It is interesting to note that the proposed changes to the Income Tax Act expand the definition of “political activities” only to the extent that making gifts that fund political activities becomes a political activity. Apart from funding, there is no further change to the statutory definition of what activities- such as advocacy or fomenting public debate- constitute political activities.
In determining the meaning of acceptable and unacceptable political activities for charities in Canada, the common law draws upon decided cases in England and Australia. In 2010 the highest court in Australia heard the appeal of a charity that had its registration revoked by the tax authorities because it was critical of the Australian government’s environmental and foreign aid policies. The charity, Aid/Watch, won when the majority judgment concluded that “the generation by lawful means of public debate, in the sense described earlier in these reasons, concerning the efficiency of foreign aid directed to the relief of poverty, itself is a purpose beneficial to the community within the fourth head in Pemsel.”
In 2011, Canada’s Federal Court of Appeal considered that very statement. The Income Tax Act expressly limits permitted political activities of a Canadian charity to those that “are ancillary and incidental to its charitable purposes”. The appellant charity lost because its purposes were not charitable. However, the court clearly opened the door to accepting the Aid/Watch decision when it stated: “the public debate carried out by a charity must itself be targeted to a charitable purpose, in that case the relief of poverty in the developing world.” Any non-partisan debate about the environment meets the Federal Court of Appeal’s test that there be a “focus on public debate concerning a genuinely charitable issue.”
There is no doubt that care for, and preservation of, the environment is “a genuinely charitable issue.” Environmental charities seek to generate, by lawful means, a public debate on environmental issues. Courts interpreting the common law have held that such a debate is itself a charitable purpose and, as such, is not a political activity and is not constrained by the requirement of being “ancillary and incidental.”
However, the government has made it very clear that it does not want environmental charities to engage Canadians in a public debate on this genuinely charitable issue. While the Minister of Finance wants Canadians to send their pennies to charities, he is providing $8 million to Canada Revenue Agency to harass charities that may be engaging in political activities.
Canadians need charities to provide forums for a balanced and intelligent debate on environmental issues. The government does not have the integrity to tell the public that its real agenda is to frustrate debates based upon “thought” rather than ideology. Therefore, it is attacking the expenditure of pennies that is needed to facilitate thoughtful and considered discussion by citizens.
Rather than implement a partisan agenda imposed by a political party, it is the duty of Canada Revenue Agency to administer the law on public debate concerning genuinely charitable issues as set out by the courts. CRA is being given millions of dollars for new audits whereas charities only have pennies to stand up for their legal rights. Individuals, corporations and foundations must find the courage and fortitude to provide funding to charities to carry on “a public debate concerning a genuinely charitable issue.”
Tags: Budget 2012, Canada, Canada Revenue Agency, charitable giving, Conservative Party of Canada, CRA, donation, Environmentalism, Federal Budget, fundraising, Pennies, Political Activities, Public Debate
Categories: Charity, Environment, Law, Politics