|“Those who believe one aspect of a charity’s objectives is to inform the public about pressing social issues should be appalled at this turn of events, that might threaten the preferred tax status of many charitable organizations.”
So said Financial Post contributing editor Arthur Drache, in his column April 7. The Ottawa lawyer was commenting on a recent decision by the Federal Court of Appeal in a case involving Human Life International. HLI has been de-registered by Revenue Canada for engaging in what are being seen as “political activities.”
HLI does not lobby for or against candidates, or for or against legislation, but does have an extensive information program designed to inform the public about the pro-life position. Revenue Canada described this as unacceptable, because such activities are “designed to sway public opinion on controversial social issues.” In its appeal, HLI argued that this is not a proper test of what is a political activity. But the second highest court in the land held that “activities designed to sway public opinion on controversial social issues are not charitable activities.”
No supporting case law
The court admitted that there is no case law establishing such a position, but Justice Barry Strayer, writing for a unanimous court, said he believed that the jurisprudence generally supports it. Drache, who was co-counsel for HLI in the case, found this position completely illogical.
“Does it mean that any subject on which there is more than one opinion is controversial, and therefore can be discussed only with some threat to charitable status?” he wrote in his column. “Can a registered charity not speak out on prison reform? Or call for a crackdown on drinking and driving? Or speak out on smoking? Or on environmental issues? Or on improving the lot of the poor? Is the subject of teenage pregnancies off limits? The list of possible subjects which might be banned is endless.”
Drache argues that the Income Tax Act allows for political activities having to do with an organization’s purposes, as long as most of the group’s resources are devoted to charitable activities. But when the vagueness of this income tax provision was raised in court, Strayer said that he “would heartily agree that this area (political activities) requires better definition by Parliament, which is the body in the best position to determine what kinds of activities should be encouraged in contemporary Canada as charitable and thus tax-exempt.”
As things stand, Drache comments, Canada has now adopted a more narrow test of political activities than is found in most of the common-law world. Revenue Canada has been given a weapon with which to go after any charity which has the nerve to bring up subjects the tax officials consider controversial. It also gives the government a strong weapon, if it finds that its policies are under attack by a group which enjoys charitable status.
Observers note that any organization supporting the pro-life position is an obvious target.