Vanier school faces loss of charitable status

Highly rated non-profit loses charitable status for failing to meet legal obligations

The federal government has announced its intention to revoke the charitable status of the Ahlul-Bayt Centre, a non-profit organization that operates one of Ottawa’s toprated elementary schools.

The decision, revealed in a recent Federal Court of Appeal ruling that rejected the centre’s attempt to delay the revocation, leaves the Ahlul-Bayt Islamic School facing an uncertain future.

The Vanier school has 160 students registered in junior kindergarten through Grade 8.

In an interview Tuesday, Ahlul-Bayt Centre president Kamal Fahs vowed the school will remain open, even if its tuition fees are declared non-tax-deductible. The centre, he said, is exploring other possibilities — including transferring ownership of the school to another charity — while still trying to work out a compromise with the Canada Revenue Agency.

“We do have options, we do have alternatives that we’re looking into right now,” Fahs said.

The private school, opened in 2002, has scored consistently well on provincial math and English tests and was ranked as the highestachieving elementary school in Ottawa by the Fraser Institute in 2016.

The school’s tuition fees of $440 a month are now tax-deductible.

But in September 2017, Revenue Minister Diane Lebouthillier advised the Ahlul-Bayt Centre that she intended to revoke its charitable status one month after publishing notice of the action in the Canada Gazette. The centre operates a school and library, and provides other social, cultural and religious programs for Ottawa’s Islamic community.

The CRA’s charities directorate audited the centre’s books for 2009 and 2010 and found the organization had failed to meet its legal obligations.

The CRA characterized those shortcomings as “serious.” It said the centre failed to demonstrate that it was “constituted for exclusively charitable purposes,” and did not maintain the required books and records. What’s more, the directorate said, the centre gave blank charitable receipts to another, unregistered organization to help it raise money, and issued inflated tax receipts for the school’s tuition fees.

In a court affidavit, a senior CRA official said the agency reviewed the centre’s response to its findings, but decided to revoke its charitable status in October 2017 “based on the seriousness of the centre’s contraventions of its statutory obligations and the resulting harm to the public.”

The centre quickly sought and won an interim stay of proceeding in the Federal Court of Appeal. But in a judgment issued recently, a three-member appeal panel turned down an application to extend that stay. The panel rejected the centre’s argument that its Islamic school could suffer irreparable harm if tuition fees were suddenly declared non-tax deductible.

“Parents who cannot afford the school’s tuition without the charitable tax receipts will have to withdraw their children from the school,” the centre’s lawyers had argued.

A revocation of its charitable status, they said, would damage its reputation and accelerate a decline in both tuition and donor revenue, which could lead to the school’s closure.

Writing for the panel, however, Justice John Laskin said the centre did not convince the appeal court that parents would abandon the school, or that it was in financial jeopardy.

Fahs said he could not comment on the specific allegations made by the CRA since they remain the subject of legal action, but he suggested that the organization had problems with the complexity of the charitable tax regime.

“Over the years, management did not understand the bylaws, the rules and regulations properly and clearly,” he said. “We’re working on correcting those things.”

Fahs said the Ahlul-Bayt Islamic school is an important part of the local Muslim community.

“I don’t think any judge, or anyone else, would want to shut down a school that’s doing such a great job,” he said.

“We’re hoping things will go the right way.”