On October 31, the government confirmed that it

“is not considering amending the Income Tax Act to remove the advancement of religion as a qualifying charitable purpose, nor is it actively developing policy on this issue.”

The Minister’s confirmation aligns with everything CCCC has heard from our own sources and those shared with CCCC by other stakeholders.

The Minister of Finance and National Revenue affirmed the government’s position in response to Petition e-6585. Below is the full response (emphasis added):

Response by the Minister of Finance and National Revenue

Signed by The Honourable François-Philippe Champagne

The Government of Canada recognizes the vital role that charities, including religious charities, play in delivering essential services to some of the most vulnerable in Canadian society. To support their important work, registered charities are granted significant tax benefits and privileges, including the ability to issue official donation receipts for the gifts they receive.

Under the Income Tax Act, an organization may only qualify for charitable registration where it is established exclusively for charitable purposes and devotes all its resources to achieving those purposes. The legal interpretation of “charitable purposes” has developed over time to include the relief of poverty, the advancement of religion, the advancement of education, and other purposes recognized as charitable, such as the promotion of health or the protection of the environment.

Today, Canada is home to over 85,000 registered charities, representing a wide variety of causes, beliefs, and interests. Registration as a charity does not indicate government endorsement of an organization’s specific goals or views. Instead, it confirms that the organization meets certain conditions, including that it is constituted and operated exclusively for charitable purposes. These benefits are extended to a broad range of organizations providing socially beneficial activities to the public, from educational institutions to religious organizations, as long as they meet the legal requirements for registration.

The Government of Canada is not considering amending the Income Tax Act to remove the advancement of religion as a qualifying charitable purpose, nor is it actively developing policy on this issue.

Want More?

For more information about CCCC advocacy work around recommendation 430, see CCCC Signs Lawyers Letters Concerning Charitable Status, CCCC Response to Troubling Recommendations on Charitable Status, Staying Informed About Charitable Status and CCCC 2025 Federal Pre-Budget Submissions.

The post Federal Government Will Not Remove Advancement of Religion appeared first on CCCC Blogs.

Factual Context

The case arises in the context of a religious organization, HMI, that had leased a government-owned conference centre in Quebec City. It secured the facility in January 2023 for an event in June 2023. On June 1, the Minister of Tourism cancelled the contract because the event was “against the fundamental principles of Quebec.” What happened?

HMI’s leaders had made pro-life statements in the past. Even though the event had no programming related to abortion, the government nonetheless characterized the event as “anti-abortion.” Because pro-life views are at odds with the province’s “fundamental principles” and “resolutely pro-choice” position, the Minister cancelled the contract.

After unsuccessfully approaching dozens of other venues, HMI was forced to cancel its event.

The Claim

HMI claims financial damages and that the Minister violated its Canadian Charter and Quebec Charter rights and freedoms, specifically freedom of religion, freedom of expression and opinion, freedom of assembly, and the right to equality on the grounds of religion or political convictions.

CCCC Intervention – Collective Religious Freedom and Religious Expression

Together with the Evangelical Fellowship of Canada and Réseau Évangélique du Québec, CCCC is intervening to defend:

• Collective religious freedom, and
• Freedom of expression

Our coalition argues that public spaces must remain open to all voices—including religious ones—without political censorship.

Collective Religious Freedom

CCCC will ask the court to confirm that religious freedom applies not just to individuals, but also to organizations. The Quebec government argues that HMI doesn’t have this right because it is not a person.

But the Supreme Court of Canada has said that religious freedom isn’t just personal—it’s also about communities. It protects both individual beliefs and the shared practices and traditions of faith groups.

The wording of both the Canadian and Quebec Charters, the purpose of religious freedom, its history, and international law all support the idea that it includes group or collective rights.

When a religious group is denied access to public spaces because of what they believe—or are thought to believe—that is a serious and unjustified violation of their religious freedom.

Religious Expression

Freedom of expression is vital—it’s the foundation for nearly every other freedom we enjoy. It gives people the right to share their thoughts, opinions, and beliefs, even if those views are unpopular or go against what most people think.

This freedom supports important values like the search for truth, active participation in society, and personal growth. For people of faith, it often overlaps with freedom of religion, as both involve speaking and living out deeply held beliefs.

When government actions limit speech so much that certain viewpoints are silenced, it causes real harm. Instead of promoting openness and inclusion—as the Charter intends—such limits create the opposite: a less tolerant environment for both speakers and listeners.

Next Steps

Our written arguments have been filed and the case is scheduled to be heard in November 2025.

Want to Know More About CCCC Interventions?

We’ve written a four-part series in our CCCC Bulletins – see our March, April, May and June 2025 editions. You can also check our Legal Cases page.

The post Standing Up for Equal Access: CCCC to Intervene in Quebec Religious Freedom Case appeared first on CCCC Blogs.

Factual Context

The case arises in the context of a young woman with incurable cancer who was admitted to St. Paul’s Hospital, operated by Providence Health Care Society, a Catholic organization. Providence Health Care Society operates in accordance with Catholic convictions that human life is sacred, that service to the sick is a fundamental, essential expression of faith and is founded on a deep respect for the dignity of every human person.

As a result, Providence does not provide MAID on its premises but arranges to transfer patients to a facility that performs MAID.

The patient in this case requested MAID, was assessed, approved, and agreed to be subsequently transferred to a nearby site that performs MAID. Before she was sedated for the transfer, the patient had an opportunity to privately visit with and say goodbye to friends and family. The patient was sedated just before her transfer and was asleep when she arrived at the MAID facility where she was euthanized.

The Claim

The patient’s family, Dying with Dignity, a euthanasia advocacy organization, and a physician together argue that permitting MAID-free healthcare facilities violates section 2 and section 7 of the Charter because it interferes with access to MAID.

Section 2 of the Charter protects freedom of conscience and religion, among others, and requires the state to be neutral toward religion. Section 7 of the Charter protects the right to life, liberty and security of the person.

Charter rights and freedoms can be limited when the limits are prescribed by law and can be “demonstrably justified.” That has been applied in law through a proportionality test which asks whether the law limiting Charter rights is sufficiently important, is rationally connected to the goal, and is proportionate in its effect.

The Defendants include the BC Minister of Health, Vancouver Coastal Health Authority and Providence Health Care Society, a Catholic health facility and non-profit corporation. For its part, the Minister of Health explains that the province supports reasonable access to MAID but must also protect the rights of medical professionals and faith-based organizations with conscientious objections to MAID.

Life-Affirming Care is Necessary

We have written elsewhere that life-affirming care is a necessary check on rapid MAID expansion and which is a collective expression of conscience about the value, worth, and dignity of all human life that must be protected under the Charter. As we explain

“Though often forgotten or conflated with religion, freedom of conscience is an independent right with independent content. It is found in section 2(a) of the Canadian Charter of Rights and Freedoms. For our Supreme Court, “it is easy to see the relationship between respect for individual conscience and the valuation of human dignity” and its central role in a free and democratic society.

Freedom of association is found in section 2(d) of the Charter. It has largely been applied by courts to union situations, but its fundamental purpose is much broader: It is meant to protect individuals from “state-enforced isolation in the pursuit of his or her ends,” to “empower vulnerable groups” and make possible a “more equal society.” Association is particularly important for the exercise of other freedoms, including conscience.”

CCCC Intervention – Conscience and Charity

CCCC sought to intervene to raise two crucial arguments:

• The need for collective conscience protections—not just for individuals, but for entire organizations.
• The importance of respecting charity law, which obliges charitable institutions to act in line with their foundational purposes.

Though the plaintiffs argued that CCCC’s perspective overlapped and duplicated those of other proposed interveners, Chief Justice Skolrood found that CCCC “represents a number of Christian charities who operate in the healthcare, social and community services sphere” and affirmed that CCCC’s perspective was different than those offered by other intervener applicants.

Conscience

CCCC will urge the court to find that an organization can have Charter-protected conscientious beliefs. The purpose of freedom of conscience is to protect basic beliefs about human worth and dignity and strongly held moral ideas of right and wrong. It must therefore, protect convictions about human life and death, and the morality of killing another human being.

It would be a very strange result to recognize in non-profit and charity law the existence and purpose of an entity to promote health from a particular conviction and then deny that very same entity freedom of conscience to do so.

The Charter should not provide a lower degree of protection for non-profit and charitable organizations than applicable corporate law statutes and common law principles. Institutional conscience furthers underlying aims of the Charter such as promoting pluralism, institutional diversity and state neutrality.

Charity

The character, nature, and duties of non-profit organizations, both under statute and the common law, show immediate and significant parallels to conscience. Constitutions and by-laws set out the organization’s purpose(s), restrictions on activities, its identity, and core convictions. Directors must act honestly, in good faith, with diligence and care, all in the best interests of the organization. Directors must ensure the organization conducts only those activities that are consistent with its constitution – acting in accordance with its identity, character, and purpose; in other words, its conscience.

Freedom of conscience is therefore a necessary correlate of the corporate and charity law constraints that require non-profit corporations to act within established boundaries.

Next Steps

CCCC will develop these charity law and conscience arguments in written form and file them with the court. The deadline for these submissions is to be determined, but the trial is scheduled for January 2026, with the parties’ written submissions to follow. The outcome of this case could radically reshape the landscape for faith-based healthcare in Canada, and CCCC will be present to advocate for protection and preservation of these invaluable organizations.

Want to Know More About CCCC Interventions?

We’ve written a four-part series in our CCCC Bulletins – see our March, April, May and June 2025 editions. You can also check our Legal Cases page.

The post Protecting Conscience Rights: CCCC to Intervene in BC Euthanasia Case appeared first on CCCC Blogs.

There are new amendments to the Ontario Not-for-Profit Corporations Act (ONCA) that will be effective October 1, 2023.

The Legislation Amending ONCA

The amendments come from Bill 91, Less Red Tape, Stronger economy Act, 2023 (“Red Tape Act”) which the Ontario government recently passed. Schedule 22 lists the ONCA-specific changes.

The Changes to ONCA

The changes to ONCA include:

Meeting Notices for Members or Directors

If the meeting is electronic, the notice does not have to specify the place of meeting.

• Director meeting – ONCA s 34(3.1), Red Tape Act s 3(1)
• Member meeting – ONCA s 55(1.1), Red Tape Act s 5(1)

If the meeting is electronic, the notice must include instructions for attending, participating, and, if applicable, voting.

• Director meeting – ONCA ss 32(5), 34 (3.2), Red Tape Act ss 2(2), 3(1)
• Member meeting – ONCA s 55(1.2), Red Tape Act s 5(1)

Meetings of members of directors

If the meeting is adjourned without notice, the time, place (if applicable) and instructions for attending and participating in the continued meeting (if applicable) must be announced at the time of adjournment.

Meeting can be held either electronically or by a combination of in-person and electronic means but the articles or by-laws can limit how the meetings may be held and specify applicable requirements.

• Director meeting – ONCA s 34(6)-(10), Red Tape Act s 3(2)
• Member meeting – ONCA s 53(4)-(8), Red Tape Act s 4

Voting by members can be entirely electronic or in combination with in-person voting unless articles or by-laws expressly provide otherwise.

• Member voting – ONCA s 58, Red Tape Act ss 6, 7

Electronic member meetings must allow attendees to reasonably participate.

• Member meeting – ONCA s 53(4)-(8), Red Tape Act s 4

Electronic director meetings must allow attendees to communicate with one another simultaneously and instantaneously.

• Director meeting – ONCA s 34(6)-(10), Red Tape Act s 3(2)

Inspecting or examining records

This can be done remotely and digital copies can be made, but there can be no charge for the digital inspection and/or copying.

• Director inspection – ONCA ss 94(3), (4), Red Tape Act s 10
• Member, member’s lawyer or corporate creditor inspection – ONCA ss 95(1.1), (1.2), Red Tape Act s 11
• Applicant inspection of member register – ONCA ss 96(1.1), (2,2), Red Tape Act s 12
• Director, member or creditor inspection of consent – ONCA ss 97 (2.1), (2,2), Re Tape Act s 13
• Member or lawyer examine financial statements – 98(2.1), (2,2), Red Tape Act s 14

Registers and records

Registers and other records can be prepared and maintained in any form as long as they can be accurately reported in a reasonable time.

• Records – ONCA s 100(1). Red Tape Act s 15

Special COVID rules no longer in effect

• ONCA Part XVI, Schedule 1, Part XVII, Red Tape Act s 17

ONCA Reminders

ONCA came into force on October 19, 2021 and charities previously governed under the Corporations Act have three years to transition to ONCA (October 19, 2024).

If you’re looking for more information, you can check out Ontario’s recommended transition considerations or plain language Guide to the Not-for-Profit Corporations Act.  There are some standard steps that these charities should undertake (and soon!) if not already started, including a review of letters patent (and any supplementary letters patent), by-laws, director and officer sections, member sections, and borrowing powers.

If your charity does not go through a transition process, the provisions in ONCA will apply to your charity by default, which could create confusion and make effective governance difficult for your directors. While there is still time with more than a year to go, if you haven’t started the process you should do so as soon as possible!

The post Amendments to the Ontario Not for Profit Corporations Act appeared first on CCCC Blogs.

INTRODUCTION

As we mentioned in a previous blog post, Bill C-32 implemented a number of changes from the 2022 Federal Budget. This included a change to the disbursement quota (DQ). Bill C-32 received Royal Assent on December 15, 2022, and the DQ changes discussed below are effective for tax years beginning on or after January 1, 2023.

WHAT IS THE DISBURSEMENT QUOTA?

Disbursement quota is the minimum amount that a registered charity must spend each year on charitable activities carried on by it, or on making qualifying disbursements.

A qualifying disbursement is when a charity makes a gift to a qualified donee (basically, another charity) or makes resources available to a grantee organization. For more on qualifying disbursements, see our member resource, Qualifying Disbursements, and our blog post, Bill C-19 Has Passed.

WHAT HAS CHANGED?

Increase to 5% for Property Exceeding $1M

The definition and calculation of disbursement quota in the Income Tax Act(ITA) have changed.  The DQ has increased from 3.5% to 5% for the portion of property not used in charitable activities or administration that exceeds $1M.

This change is effective for tax years beginning on or after January 1, 2023.

See section 34(1) of Bill C-32; section 149.1(1) ITA.

If a charity’s property not used in charitable activities or administration does not exceed $1M, the DQ stays at the same rate of 3.5%.

Management & Administration Not Included (Clarification)

The ITA has been amended to clarify that “expenditures on administration and management of the charity” are not deemed to be an amount spent on charitable activities or a gift to a qualified donee (basically, another charity). In other words, these costs don’t count toward a charity’s obligation to meet its disbursement quota.

CRA’s T3010 guidance explains that expenditures can be partly charitable and partly management and administration. It is unclear whether the ITA amendments will impact CRA’s approach.

This change is effective for tax years beginning on or after January 1, 2023.

See section 24(2) of Bill C-32; *new* section 149.1(1.1)(d) of ITA

Discretionary Reduction in DQ

There are some changes to the wording around the Minister’s discretionary reduction of the disbursement quota.

In its previous form, when the Minister agreed to reduce the disbursement quota for a charity’s tax year, the amount was “deemed to be an amount expended by the charity.” In the amended version, the Minister will “specify an amount” and the “disbursement quota shall be deemed to be reduced by that amount.”

Charities must still apply for the reduction and the Minister still has discretion to grant or not grant it. It’s simply that the prescribed amount is now deemed a reduction rather than an amount expended.

This change is effective for tax years beginning on or after January 1, 2023.

See section 34(4) of Bill C-32; section 149.1(5) ITA

Disclosing Applications for Reduction in DQ

The government can disclose “to any person” the application, information filed in support of a charity’s application, and a partial or full copy of any letter or notice from the Minister to the charity about its application to reduce its DQ. 

This change is effective for tax years beginning on or after January 1, 2023.

See section 55(1) Bill C-32; s 241(3.2) ITA.

The post Disbursement Quota Changes in Effect appeared first on CCCC Blogs.

Feedback

If you have comments about the draft, you can send your comments and suggestions by email, mail or fax. The deadline is January 31, 2023.

Contact details area available on CRA’s Feedback on policies and guidance page.

Summary of the Draft Guidance

The guidance is a long document, and we list the significant elements in detail below. The 5-sentence takeaway is that sufficient documentation for grants is not too different from the documentation charities are required to show when exercising direction and control. However, one very significant difference introduced in the draft guidance is that charities use a risk-based analysis to determine what is necessary in the specific circumstances. High risk scenarios naturally require more due diligence, greater formality and structure to a grant agreement, and grantee reporting. Low risk scenarios, on the other hand, require a lot less background work and need not be as formal. While CRA makes very strong recommendations, there is more flexibility in how charities can demonstrate accountability for grants.

Remind Me, What are Grants?

The ITA answers this question in s 149.1(1), as part of the definition of “qualifying disbursement.” A qualifying disbursement is any transfer of resources from a charity to a qualified donee (gift) or a non-qualified donee (grant) that meets certain conditions.

That means a grant is the transfer of resources to a non-qualified donee, also called a grantee.

All qualifying disbursements, whether a gift or a grant, must further a charitable purpose of the charity; the charity must ensure it is applied exclusively to charitable activities in furtherance of (one of) its charitable purpose(s); and, the charity must maintain sufficient documentation to demonstrate the first two conditions are met.

We’ve answered these and many more basic questions in our Member Resource, Qualifying Disbursements. You can also take a look at our past blogs. They’re all listed at the end of the post Bill C-19 Has Passed – Impact on Direction and Control.

What Does the Draft Guidance Tell Us?

The ITA tells us the legal definition of qualifying disbursements (including grants) but it doesn’t tell us everything we need to know about making grants, most importantly, what documentation will be considered sufficient by CRA when a charity makes a grant. The draft guidance fills in these gaps and provides some context for how this impacts charities and how they operate.

LANGUAGE OF GRANTS

The ITA uses the term “qualifying disbursements.” This term includes both gifts to qualified donees and making grants to non-qualified donees. Charities could already make gifts to qualified donees (other charities). This guidance focuses on grants to non-qualified donees (non-charities).

DIFFERENCES BETWEEN GRANTS & OWN ACTIVITIES (DIRECTION & CONTROL)

The guidance lists 7 differences between rules for grants and rules for ‘own activities’ (direction & control):

• Granting opens new opportunities and new ways to work
• Granting allows for a collaborative, rather than a hierarchical relationship between the charity and grantee
• Granting does not make the grantee a representative of the charity; it carries on its own programs
• Granting does not require that the activity be the charity’s initiative; grants can support existing activities by a grantee
• Granting does not require ongoing instructions from the charity
• Granting does not require the charity to exercise direction and control
• Granting focuses on risk and accountability

RELATIONSHIPS CAN CHANGE FROM INTERMEDIARY TO GRANTEE

The draft guidance recognizes that “a charity’s relationship with a non-qualified donee may evolve, and the charity can convert its relationship with the non-qualified donee (for example, from an intermediary to grantee relationship.”

How? A charity needs to document the “change in its books and records and be sure to meet all requirements at the time of the change.”

SUFFICIENT DOCUMENTATION FOR MAKING GRANTS

CRA’S FLEXIBLE APPROACH

Charities have to ensure and demonstrate in their books and records that it meets accountability requirements.

CRA is taking a “reasonable and flexible approach when determining whether a charity has met the accountability requirements.” The accountability tools CRA identifies are “not exhaustive and their suitability depends on the circumstances of individual grants.” Where charities use different tools, they need to explain why in their books and records. Charities should also use a consistent approach to making grants.

CRA’S RECOMMENDED PROCESS

There are four main steps:

1. How does the grant further your charitable purposes?
2. What is the grant’s risk level – low, medium or high?
3. What accountability tools should you use based on the risk level?
4. How should those accountability tools be applied to each grant?

STEP ONE: CHARITABLE PURPOSES

This should be a familiar and consistent part of a charity’s operational decisions: does the proposed project, activity, grant, etc. further one or more of your organization’s charitable purposes? If yes, how? Be sure to record these considerations and conclusions in your charity’s books and records.

STEP TWO: RISK ASSESSMENT

Risk factors (higher risk listed first) include:

• Charity’s experience – no, some, or significant grant experience?
• Grantee’s experience – new grantee, some, or extensive programming experience?
• Grant activity location – outside or inside Canada? Stable or unstable? Lack of, unreliable, or reliable infrastructure (banks, internet)? No, some, or extensive experience in that location?
• Grant amount – high ($25,000+), moderate ($5,000-$25,000), or low (up to $5,000)?
• Private benefit concerns – significant, some or limited/little concern?
• Nature of resources granted – susceptible to non-charitable use (cash, crypto, real property), somewhat susceptible (mix of cash and others) or not susceptible (textbooks, medical supplies)?
• Grant duration – long term with no end date, long term with an end date (1-2 years) or short term (less than 1 year)?

Where the risk level changes during the course of a grant, charities should re-visit their due diligence process to determine what changes, if any, should be made to the terms of the grant.

Some examples of increased risk include: financial collapse in nation/region of activity, poor quality grantee reports, discovering private benefit, change in grantee’s leadership.

Some examples of decreased risk include: financial stabilization, peace established in nation/region of activity, strong track record with a grantee, grantee exceeds expectations, decreased value in charitable resources.

STEP THREE: ACCOUNTABILITY TOOLS

Due diligence review of the grantee

For due diligence, the higher the risk, the more extensive the review needs to be.

What should charities assess? Charities should assess the grantee’s purposes and mission, programs, history, reputation, staff, volunteers, associated people or entities, experience and capacity to carry on the grant activity, and the potential use of the grant.

How can the review be done? Charities can do independent research, make in-person visits, have virtual meetings, request information from the grantee, review past grant outcomes, and read letters of reference/support.

What if you already have a working relationship with the grantee? Charities that have “already formed a successful working relationship with a grantee” may not need to conduct an “extensive” review.

What if you can’t do an extensive review? Charities “may wish to consult with experts, community leaders, or other charities” about the risks and document the steps it does take.

Description of grant activity

For grant activity descriptions, the higher the risk, the more detailed the written description needs to be.

What should charities describe? Charities should consider including the activity and charitable purpose(s) it furthers, location of grant operations, start and end dates, public benefit, how to address unacceptable private benefit, deliverables/objectives, any third parties the grantee will use to carry out the activity, and any accountability tools that will be used.

Where should the description be kept? Charities should keep the description in their books and records, review it with the grantee, and include it in any written agreement.

Written agreement

For written agreements, higher risk requires a formal agreement, whereas lower risk agreements can be simple.Where less than $5000, documentation alone is likely sufficient.

Why should charities use written agreements? It documents the grant, its charitable purpose and budget, it clarifies expectations, it confirms terms and conditions, and it keeps grants on track. CRA recommends that charities have a written agreement for every grant.

What about grants less than $5000? For non-recurring grants written agreements may not be required. For “very low risk circumstances” other documentation may be enough (emails, meeting minutes). If the grants will be ongoing (e.g. annually), CRA recommends a written agreement.

What if charities can’t use written agreements? The charity should explain the reason in its books and records and have other documentation.

What should charities include in written agreements? Charities can include a myriad of information in a written agreement: legal names and addresses, signatures of authorized persons, signing date, intention to make a grant (versus intermediary), description(s) of activity, charitable purpose it furthers, location of activity, start and end dates of funding/the relationship, reporting requirements, a right to inspect, periodic transfer of funds with and any applicable conditions, right to require return of unused resources, requirement of separately tracked funds, limit use of resources for only charitable purposes, effective date, and termination provisions.

Monitoring and reporting

For monitoring and reporting, higher risk requires detailed, written, and final (and possibly interim) reports. Lower risk would only need a simple, written, final report. CRA recommends that every grant require a final written report with supporting documentation (where appropriate).

What kind of monitoring and reporting should charities do? Monitoring and reporting could include final reports with documentation, interim reports, expense receipts, financial statements, records of phone, email, and video communications, photos and videos, audit reports, and records from on-site visits by charity staff.

What should a charity do with the reports? Charities should record in their books and records that they have reviewed the final reports, and briefly explain why they are satisfied with them.

Transfer schedule

For transfer schedules: higher risk requires a transfer schedule; it should likely be used for medium risk; and is a consideration for lower risk.

Why should charities use a transfer schedule? Charities should use a transfer schedule because it allows a charity to mitigate losses if resources are not used according to the agreement.

What if charities don’t use a transfer schedule? The reason should be recorded in charities’ books and records.

Separately tracked funds

For separately tracked funds, all levels of risk should have this in place.

Why should charities require separately tracked funds? Charities should require separately tracked funds because it helps them document use of the grant.

What does it mean to have separately tracked funds? Separately tracked funds does not require separate books and records or a separate bank account. Instead, it means that the grantee can track the funds with enough detail to report back to the charity. It is preferable if the grant can be separately tracked in the grantee’s books and records.

LIMIT ON GRANTS

The guidance confirms that charitable organizations can disburse no more than 50% of their income by way of gifts to qualified donees (other charities). Disbursing more means that the charity would be re-designated as a foundation.

The guidance also confirms that charitable organizations can disburse unlimited amounts by making grants to grantees (non-qualified donees).

PROHIBITION ON DIRECTED DONATIONS: CLARITY

The ITA requires that charities cannot accept gifts that are expressly or implicitly conditional on the charity granting it to a specific recipient.

The guidance confirms that “provided a charity ensures it retains authority on the use of its resources, it will not be considered to be engaged in directed giving,” even if a donor has indicated a preference for how the donation will be used.

How does a charity ensure it retains authority on the use of its resources? Charities should clearly communicate that (1) they retain ultimate authority on how it uses its resources, and (2) they will not return the donation to donors if the donation is not used the way the donor prefers.

What’s the point of this prohibition? The purpose is to prevent a charity from existing “solely … as a fundraising arm in Canada of an affiliate organization in another country.”

REPORTING GRANTS

The ITA already set out the requirements for reporting: for every grant over $5,000, the granting charity must report the name of the grantee, the purpose of the grant, and the total yearly amount granted to the grantee.

What about security concerns? Charities can apply to CRA to request that some of the information not be publicly disclosed “if its release would place the charity, grantee, their staff, or volunteers in danger.”

POOLED GRANTS

The draft guidance outlines specific accountability tools that are expected of charities participating in pool grants. It also provides additional factors to determine whether the pooled grant is higher risk. If charities cannot use the recommended accountability tools, CRA “recommends approaching pooled grants cautiously” and that legal advice may be prudent.

GRANTING CHARITABLE GOODS

The draft guidance outlines specific accountability tools that are expected of charities granting charitable goods. It is a low-risk activity so long as the resources could only reasonably be used for charitable purposes.

GRANTING REAL PROPERTY

The draft guidance outlines specific accountability tools that are expected of charities granting real property. It is a high-risk activity because it is very difficult to ensure that the property will be permanently used for charitable purposes. Where the risk of non-charitable use is “greater than the benefit that may be provided” CRA’s position is that the charity should not grant the property. CRA also recommends contacting the Charities Directorate before granting any real property.

The post CRA Draft Guidance on Making Grants to Non-Qualified Donees appeared first on CCCC Blogs.

CCCC agrees that dishonesty is wrong but is concerned about the significant and serious issues this proposal raises – issues that would impact the entire charitable sector. Over the past year we’ve written several letters to Cabinet Ministers about this proposal, expressing concerns also shared by others in the charitable sector.

We’ve written again to the Minister of Finance by way of an open letter. This open letter reiterates a few of our key concerns and makes specific recommendations. The full text of the letter is below.

You can also watch a video interview between Karen Stiller at The EFC and Deina Warren of the CCCC as they discuss why Canadians need to be aware of these recent challenges to charitable status.

Open Letter to the Minister of Finance: Full Text

Dear Hon. Minister Freeland,

We understand that the Prime Minister’s mandate letter instructs you, as the Deputy Prime Minister and Minister of Finance, to introduce amendments to  the Income Tax Act (“ITA”) in order to “make anti-abortion organizations that provide dishonest counselling to pregnant women about their rights and options ineligible for charitable status” (“Mandate Letters”).

The Canadian Centre for Christian Charities (CCCC) believes in a transparent, accountable, and effective charitable sector. To be abundantly clear, as a Christian organization, CCCC agrees that dishonesty is wrong. We do not and would not support charities that conduct their activities in dishonest ways, regardless of their charitable purposes or objectives.

However, the proposal raises many significant and serious issues that would impact the entire charitable sector. Since we first raised concerns about this matter in our letter of November 24, 2021, we have asked for the government to engage stakeholders such as CCCC on this matter and have continued to make ourselves available for collaborative discussions about the proposed ITA amendments.

Unfortunately, we have not been taken up on our offer, nor have we received any reply that addresses this issue.

In the absence of an opportunity for collaborative discussion, we write this open letter to reiterate a few of our key concerns with the government’s proposal and to make specific recommendations.

Concerns

Concern #1: Politicizing charitable status

The Mandate Letters do not, on their face, seek to address “dishonest counselling” generally, but only that which is allegedly provided by organizations with a certain perspective. By singling out a subset of charities based on a position or beliefs about a particular issue, the proposal appears to be motivated solely by political considerations. As such, it is an unwarranted politicization of charitable status that puts all charities at risk.

Concern #2: Long-term Impact

If an organization’s charitable status is at risk simply because its views or beliefs are different than those of the government, all charities are at risk. It means that every time the government adopts a new view or political priority, or any time a new government is elected, charitable status for specific groups could be in jeopardy and charities may be singled out for additional monitoring or audits simply because they hold different views than the government.

Concern #3: Lack of Data

The Mandate Letters are troubling because of their vague assertions and unproven assumptions of dishonesty toward a specific subset of charities. The government must (a) clearly define what it means by the terms “dishonest,” “dishonest counselling,” and “anti-abortion organizations,” and (b) substantiate the basis for these allegations with objective data that would justify such drastic action as making organizations ineligible for charitable status.

Concern #4: Jeopardizes A Diverse Charitable Sector

Canada is a diverse and pluralistic nation. Its diversity is represented in many ways, including through the diversity of its charitable organizations. When it comes to all matters of conscience, belief, and non-belief it is incumbent on the government to neither “favour nor hinder any particular belief, and the same holds true for non-belief”(Mouvement laïque québécois v Saguenay (City), 2015 SCC 16 at para 72 [Saguenay]). It is very dangerous territory when a government wades into debates over matters of opinion, even those that are strongly held. One only need recall the scrutiny environmental charities endured, both federally and provincially, to see the danger of characterizing an opinion as “dishonest” simply because a government may disagree.

Concern #5: Charter Infringements

This proposal raises many potential Charter infringements. Here we highlight only two.

Freedom of expression ensures that everyone can express their thoughts, opinions, and beliefs, however unpopular or contrary to the mainstream (Irwin Toy Ltd. V Quebec (Attorney General), [1989]1 SCR 927at 968). Freedom to fully and openly express views on social and political issues is fundamental to democracy and therefore to all other Charter rights and freedoms. Restrictions that touch the core of social and political issues raise concerns about the “dangers inherent in state censorship of such debate” (R. v. Keegstra, [1990] 3 SCR 697 at 849).

Freedom of religion means the government must preserve a neutral public space where there is “true freedom to believe or not to believe.” Neutrality does not mean “the homogenization of private players in that space.” Rather, neutral public spaces “preserve and promote the multicultural heritage of Canadian society” (Saguenay at para 74). As one author has put it, “the state should be secular so that citizens do not have to be” (Paul Marshall, Institutional Religious Freedom: An Overview and Defense, Religions 12(5):365 at p 20, citing Cécile Laborde, Liberalism’s Religion (Cambridge: Harvard University Press) at 125.).

Recommendations

Recommendation #1: Existing Tools Are Sufficient

Canada Revenue Agency (CRA) has substantial tools at its disposal to address fraudulent actors and dishonest reporting that rightly fall within the parameters of the ITA – we encourage the government to review the robust compliance mechanisms currently available to CRA.

For example, CRA can review whether a charity’s activities align with the activities and purposes it identified during the registration process. This is a well-established, education-first, and procedurally fair process. Charities engaging in conduct that falls outside the scope of their approved purposes and activities would rightly merit scrutiny.

Further, dishonesty is already addressed in the ITA. Charities that make false statements in circumstances that amount to culpable conduct (s 149.1(4.1)(c), 168(1)(d) ITA) can lose charitable registration. Similarly, charities are prohibited from having directors, trustees, officers or like officials who, among other things, have been convicted of crimes involving financial dishonesty (s 149.1(1)).

These are just a few examples of how CRA ensures charities are operating in compliance with legal and regulatory requirements. If CRA’s existing tools are inadequate, the government must clearly state how and why these tools are insufficient.

Recommendation #2: Disclose Data

Decisions impacting the charitable sector should be evidence-based. As the Special Senate Committee on the Charitable Sector emphasized in its report, Catalyst for Change, data is necessary “to support the evidence base for decisions” within the sector. Similarly, the Advisory Committee on the Charitable Sector Data Working Group is focusing its work to support the “Government’s capacity to make evidence-based decisions on the issues and priorities of the sector.”

Changes that could implicate charitable registration are serious and significant. Any such changes must be evidence-based. We would therefore recommend that the government disclose the data on which it is relying for its proposed changes.

Conclusion

Should the government choose to push forward despite these concerns, we expect it will first demonstrate how any change would, at minimum, meet a variety of prerequisites such as transparency in purpose, legislative authority for its use, Charter compliance, alignment with CRA’s education-first compliance approach, procedural fairness, etc.

Nonetheless, we trust that, given the concerns about politicizing charitable status shared broadly across the charitable sector, and the existing compliance mechanisms available to CRA, the policy proposal set out in the Mandate Letters will not be pursued.

As always, CCCC remains available and willing to participate in meaningful and collaborative discussions on this issue. We look forward to hearing from and working with you.

Sincerely,

Canadian Centre for Christian Charities

Interview with The EFC

The post Charitable Status: Open Letter to the Minister of Finance appeared first on CCCC Blogs.

We aren’t alone in our concern. Diverse charity representatives are also concerned about the destabilizing and detrimental impact of politicizing charitable status. To this end, our friends at Cardus are hosting an important panel discussion on the government’s use of charitable status to influence charities and their important work.

The September 28 event (Un)Charitable? Is Charitable Status Being Politicized?, features panelists from across the charitable sector:

• Kate Cornell, Interim Director, Public Policy and Advocacy, Imagine Canada
• Tim Gray, Executive Director, Environmental Defence Canada
• Laura Lewis, Executive Director, Pregnancy Care Canada
• Rizwan Mohammad, Advocacy Officer, Public Policy and Government Relations, National Council of Canadian Muslims

You can register for the in-person event in Ottawa or you can register to participate virtually.

The post Panel Discussion: Politicizing Charitable Status appeared first on CCCC Blogs.

Bill C-19 Budget Implementation Act (BIA) Changes: Qualifying Disbursements

The BIA amends the Income Tax Act (ITA) to allow charities to work with non-charities. How? It adds a new category of permitted resource expenditures called “qualifying disbursements.”

To make “qualifying disbursements” charities need to maintain documentation sufficient to demonstrate:

1. The purpose for the disbursement and
2. That it is exclusively applied to charitable activities in furtherance of a charitable purpose

This brings the BIA more or less in line with Bill S-216, Effective and Accountable Charities Act.  The focus is on the purpose of the disbursement and ensuring the activities are charitable, rather than a focus on means of control.

The BIA does not eliminate “own activities” and direction and control from the ITA like Bill S-216 proposed. Instead, as explained above, it creates a new category of “qualifying disbursements.”

Bill C-19 Budget Implementation Act (BIA) Changes: Reporting

The BIA requires charities to report on every qualifying disbursement greater than $5,000, including the name of the grantee organization, total amount received and the purpose of the disbursement. As others have noted, this section creates problems because it requires disclosure of potential sensitive information (e.g. charities working in areas with security risks or potential persecution).

Bill C-19 Budget Implementation Act (BIA) Changes: No Directed Giving

The BIA prohibits charities from receiving donations that are expressly or implicitly conditional on the charity making a gift to another organization other than a qualified donee. As others have noted, this section creates problems because it precludes charities “from fundraising for programs being run by grantee organizations.”

What happened to Bill S-216?

Bill S-216 is repealed.

What’s Next?

Now that the BIA has passed, CRA will undoubtedly prepare guidance as to what it considers “sufficient documentation.” Charities need this clarity. It helps ensure compliance and consistency.

In an earlier version of the BIA, there was a long list of requirements charities had to meet in order to make qualifying disbursements. The Finance Committee deleted the list at the urging of the charitable sector. Even though the mandatory list is gone, we shouldn’t be surprised to see some of the same elements appear in a guidance document.

What Can You Do? Tell Us What You think!

What do you want to see (or not!) in CRA Guidance? What would be most helpful for you? Do you think a $5000 threshold for reporting is reasonable? We’re talking about this right now in The Green – join us! Your input and feedback is essential and will help us represent you – our members – as we have opportunity to engage with government on this topic.

Looking for More? Check out our Direction & Control series…

Direction and Control – Advocacy Update, Bill C-19 Amendments (6 June 2022)

Direction and Control – Advocacy Opportunity (26 May 2022)

Budget Implementation Act, Bill S-216 and Direction & Control (6 May 2022)

Update: Bill S-216 on Direction and Control (3 March 2022)

Bill S-216 on Direction and Control – Different Name, Same Aim (9 December 2021)

What’s Happening with Bill S-222? (30 June 2021)

Bill S-222: From Direction and Control to Reasonable Steps (10 February 2021)

For more information on direction and control, see our Resource Page in CCCC Knowledge Base.

The post Bill C-19 Has Passed – Impact on Direction & Control appeared first on CCCC Blogs.

Bill C-240 Voted Down

Bill C-240 was voted down at second reading.

There was a divide in the House of Commons: the minority government and its supporting party voted against the bill (with a couple exceptions), while members from the other three opposition parties voted for the bill.

The government argued that Bill C-240 would “undermine the effectiveness of the tax incentives provided under the ecological gift program”; that it was “expected to be costly”; that it “would certainly increase the pressure on government to also provide special exemptions for donations of other types of property, such as virtual currency or cash gifts made after tax income.” Its supporting party took similar positions.

Other opposition MPs supported the purpose of the bill but had some questions about effectiveness and fairness that could be examined by the Finance Committee. The MP who introduced the bill highlighted “broad stakeholder support” for the Bill and asked the House to move it to committee to closely examine the proposal. A committee can answer detailed questions, hear from expert witnesses, and make recommendations for improvement.

But this bill will not go to committee for examination – it has died, or been ‘negatived’ by the vote at second reading.

What’s Next?

This is the second time this bill has been introduced. In November 2020, it’s predecessor Bill C-256 was introduced but when the election was called, the bill died. Similar legislation was introduced in 2015 but was never enacted. It’s likely that at some point in the future we will see a new version of this bill introduced. Depending on the composition of the government at the time, it could come in the form of a government bill, or perhaps will be another private members’ bill. It could also start in the Senate, as we saw with Bill S-216.

What Would Bill C-240 Have Changed?

Capital gains tax on arm’s-length sales of private shares or real estate would have been reduced to zero if listed conditions were met. Some of those conditions included:

• that the gift is made within 30 days after the disposition
• that any advantage received is accounted for
• that the purchaser is at arm’s length to both the taxpayer and the charity

For More…

On some of the background information and CCCC’s view on Bill C-240 see Private Shares, Real Estate & Donations: Changes Proposed by Bill C-240.

The post UPDATE on Private Shares, Real Estate & Donations: Changes Proposed by Bill C-240 appeared first on CCCC Blogs.