{"id":28717,"date":"2020-01-17T08:56:57","date_gmt":"2020-01-17T13:56:57","guid":{"rendered":"https:\/\/www.cccc.org\/news_blogs\/?p=28717"},"modified":"2020-01-17T08:57:04","modified_gmt":"2020-01-17T13:57:04","slug":"supreme-court-wont-hear-revocation-appeal","status":"publish","type":"post","link":"https:\/\/cccc.org\/news_blogs\/legal\/2020\/01\/17\/supreme-court-wont-hear-revocation-appeal\/","title":{"rendered":"Supreme Court Won&#8217;t Hear Revocation Appeal"},"content":{"rendered":"\n<p><em>Authored by Deina Warren, Associate Director, Legal Affairs<\/em><\/p>\n\n\n\n<p>The Supreme Court of Canada (SCC) has <a href=\"https:\/\/scc-csc.lexum.com\/scc-csc\/scc-l-csc-a\/en\/item\/18114\/index.do\">declined to hear an appeal<\/a> by Many Mansions Spiritual Centre about the revocation of its charitable status. Many Mansions was appealing a <a href=\"http:\/\/canlii.ca\/t\/j16vj\">Federal Court of Appeal decision (FCA)<\/a><a href=\"#_edn1\">[1]<\/a> that had confirmed the revocation.<a href=\"#_edn2\">[2]<\/a> <\/p>\n\n\n\n<p>When the SCC\ndismisses an application to appeal (called \u201cleave to appeal\u201d), it means the\ndecision appealed from remains in force.<a href=\"#_edn3\">[3]<\/a>\nThere are no further appeals available. For Many Mansions, this means it has no\nmore recourse to challenge its loss of charitable status. <\/p>\n\n\n\n<p>Why was it\nrevoked in the first place? Many Mansions had been audited for two fiscal\nperiods (2011 and 2012) and the Minister of National Revenue (MNR) provided\nmultiple reasons for revocation under <a href=\"https:\/\/laws-lois.justice.gc.ca\/eng\/acts\/i-3.3\/page-199.html#h-310503\">section\n168(1) of the&nbsp;<em>Income Tax Act<\/em><\/a><em> (ITA)<\/em>:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>failure to devote all resources to charitable\nactivities<\/li><li>activities inconsistent with charitable objects<\/li><li>providing private benefit to members<\/li><li>failure to file information returns<\/li><li>issuing donation receipts not at fair market\nvalue<\/li><li>failure to keep adequate books and records<\/li><\/ul>\n\n\n\n<p>In its\nappeal at the FCA, Many Mansions argued that deciding whether its activities were\ninconsistent with its objects was a matter of doctrine or theology and should\n\u201chave no place in government.\u201d<a href=\"#_edn4\">[4]<\/a>&nbsp;The\nFCA disagreed: \u201cin the case of a charity registered for the purpose of furthering\na religious object, it may be necessary to determine the scope of that object\nand the extent to which the charity\u2019s activities come within it.\u201d<a href=\"#_edn5\">[5]<\/a><\/p>\n\n\n\n<p>Even if the\ndoctrine\/theology argument had been accepted, non-compliance with\nrecord-keeping requirements and conferring private benefit were sufficient\nreasons to revoke Many Manion\u2019s charitable status. Indeed, each ground in\nsection 168(1) <em>ITA <\/em>can independently justify revocation.<\/p>\n\n\n\n<p>Record-keeping\nproblems included failure to document rent payable, failure to document a loan\nfrom the pastor\u2019s late wife, and inconsistencies in amounts due to the pastor. Many\nMansions argued it was audited as a nascent charity being run by volunteers,\nthe deficiencies were minor, and it had since hired professionals. The FCA\ndisagreed, reiterating that \u201ca charitable organization\u2019s obligation to maintain\nadequate books and records is \u2018<strong>foundational<\/strong>.\u2019\u201d<a href=\"#_edn6\">[6]<\/a>&nbsp;\nThese were not minor deficiencies; these were serious.<\/p>\n\n\n\n<p>Private\nbenefit problems included the pastor using meeting rooms to operate a private\nbusiness. While the&nbsp;<em>ITA<\/em>&nbsp;permits a charity itself to carry on a\nrelated business, the pastor\u2019s private business did not fall within the\nexception; it was an impermissible use of charitable funds for personal\nbenefit.<a href=\"#_edn7\">[7]<\/a>&nbsp;<\/p>\n\n\n\n<p>The FCA held\nthe MNR decision to revoke Many Mansions\u2019 charitable status was not too severe\nbut reasonable. The facts were sufficient to permit the MNR to see the\nnon-compliance as \u201cserious or aggravated\u201d and as \u201cwarranting revocation.\u201d<a href=\"#_edn8\">[8]<\/a>&nbsp;While\nthe SCC does not give reasons for dismissing leave to appeal applications, a dismissal\nsuggests the SCC sees no compelling reason to interfere with the analysis or\noutcome. In other words, it appears that the SCC likewise concurs with the\ndecisions of the MNR and the FCA. <\/p>\n\n\n\n<p>This is a\ngood reminder that all charities need to know, understand and abide by CRA\u2019s\nrequirements for maintaining books and records (see <a href=\"https:\/\/www.cccc.org\/bulletin_article\/547\">part one<\/a> of our recent\nBulletin series on the topic). Charities also need to avoid using charitable\nresources for personal benefit. <br><\/p>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<p><a href=\"#_ednref1\">[1]<\/a> <em>Many Mansions Spiritual Center, Inc. v Canada\n(National Revenue)<\/em>, 2019 FCA 189 [<em>Many Mansions<\/em>], online: <a href=\"http:\/\/canlii.ca\/t\/j16vj\">http:\/\/canlii.ca\/t\/j16vj<\/a> <\/p>\n\n\n\n<p><a href=\"#_ednref2\">[2]<\/a>\nSee my article on the FCA decision in \u201c<a href=\"https:\/\/www.cccc.org\/bulletin_article\/544\">Horizons<\/a>\u201d <em>CCCC Bulletin\n<\/em>2019:4 (4 September 2019) <\/p>\n\n\n\n<p><a href=\"#_ednref3\">[3]<\/a>\nThere are approximately <a href=\"https:\/\/www.scc-csc.ca\/unrep-nonrep\/app-dem\/important-eng.aspx\">600 leave\napplications<\/a> submitted to the SCC each year and only about 80 are approved\n(or \u201cgranted\u201d)<\/p>\n\n\n\n<p><a href=\"#_ednref4\">[4]<\/a> <em>Many Mansions, <\/em>at para 6<\/p>\n\n\n\n<p><a href=\"#_ednref5\">[5]<\/a> <em>Ibid<\/em>.<\/p>\n\n\n\n<p><a href=\"#_ednref6\">[6]<\/a>\n<em>Ibid<\/em>&nbsp;at para 10 [emphasis added]. For further information, see\nsection 230(1) of the Income Tax Act; CRA, \u201cBooks and Records\u201d (last modified\n21 July 2016) online: &nbsp;<a href=\"http:\/\/www.canada.ca\/en\/revenue-agency\/services\/charities-giving\/charities\/operating-a-registered-charity\/books-records.html\" target=\"_blank\" rel=\"noreferrer noopener\">www.canada.ca\/en\/revenue-agency\/services\/charities-giving\/charities\/operating-a-registered-charity\/books-records.html<\/a>;\nand <em>CCCC Charities Handbook, <\/em><a href=\"https:\/\/www.cccc.org\/members_ch_show\/chapter_26\">Chapter 26: Books and\nRecords<\/a>&nbsp;<\/p>\n\n\n\n<p><a href=\"#_ednref7\">[7]<\/a>\nSee&nbsp;<em>CCCC Charities Handbook<\/em>, <a href=\"https:\/\/www.cccc.org\/members_ch_show\/chapter_5#h3_4\">Chapter 5: Related\nBusiness Activities, \u201cLinked and Subordinate Business\u201d<\/a>; CRA\u2019s \u201cPrivate\nBenefit\u201d summary policy, (9 June 2003), online:&nbsp;<a href=\"http:\/\/www.canada.ca\/en\/revenue-agency\/services\/charities-giving\/charities\/policies-guidance\/summary-policy-p09-private-benefit.html\" target=\"_blank\" rel=\"noreferrer noopener\">www.canada.ca\/en\/revenue-agency\/services\/charities-giving\/charities\/policies-guidance\/summary-policy-p09-private-benefit.html<\/a>;\nand section 3.2.4, \u201cPrivate benefit: To what extent may individuals benefit\nprivately?\u201d (10 March 2006), online: CRA&nbsp;<a href=\"http:\/\/www.canada.ca\/en\/revenue-agency\/services\/charities-giving\/charities\/policies-guidance\/policy-statement-024-guidelines-registering-a-charity-meeting-public-benefit-test.html#toc12\" target=\"_blank\" rel=\"noreferrer noopener\">www.canada.ca\/en\/revenue-agency\/services\/charities-giving\/charities\/policies-guidance\/policy-statement-024-guidelines-registering-a-charity-meeting-public-benefit-test.html#toc12<\/a>.<\/p>\n\n\n\n<p><a href=\"#_ednref8\">[8]<\/a> <em>Many Mansions<\/em>, at paras 13-14<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Authored by Deina Warren, Associate Director, Legal Affairs The Supreme Court of Canada (SCC) has declined to hear an appeal by Many Mansions Spiritual Centre about the revocation of its charitable status. Many Mansions was appealing a Federal Court of Appeal decision (FCA) When the&#8230; <a href=\"https:\/\/cccc.org\/news_blogs\/legal\/2020\/01\/17\/supreme-court-wont-hear-revocation-appeal\/\" class=\"linkbutton\">More<\/a><\/p>\n","protected":false},"author":10,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ts_fic_featured_image_caption":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[159,176],"tags":[431,401,391],"series":[],"class_list":["post-28717","post","type-post","status-publish","format-standard","hentry","category-charity-law-and-policy","category-income-tax-act","tag-books-and-records","tag-charitable-status","tag-supreme-court-of-canada"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Supreme Court Won&#039;t Hear Revocation Appeal - CCCC Blogs<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/mail.cccc.org\/news_blogs\/legal\/2020\/01\/17\/supreme-court-wont-hear-revocation-appeal\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Supreme Court Won&#039;t Hear Revocation Appeal - CCCC Blogs\" \/>\n<meta property=\"og:description\" content=\"Authored by Deina Warren, Associate Director, Legal Affairs The Supreme Court of Canada (SCC) has declined to hear an appeal by Many Mansions Spiritual Centre about the revocation of its charitable status. 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Many Mansions was appealing a Federal Court of Appeal decision (FCA)[1] that had confirmed the revocation.[2] When the... 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