Feds to allow charities to engage in political, not partisan, activity

OTTAWA — The federal government is appealing an Ontario court ruling striking down limits on the political activities of charities, while saying it will introduce legislation this fall to eliminate those limits.

Revenue Minister Diane Lebouthillier said there were significant errors of law in the July 16 ruling that require an appeal despite the legislative plans. Lebouthillier said the decision created uncertainty and the government wants clarification.

Nonetheless, this fall the government will change the Income Tax Act to lift a restriction that prevents a registered charity from spending more than 10 per cent of its resources on political activities. The plan is to allow charities to pursue political activities, such as lobbying a government in favour of a particular policy, while continuing to bar partisan activities, such as campaigning for a specific party or donating money to them.

The Liberals campaigned on a promise to modernize rules for charities and notfor-profits following an audit program launched by the former Conservative government that critics said was politically motivated to go after charities working at odds with government policies. As many as 60 charities had their books audited to look for violations of the 10 per cent rule, and several were warned their ability to issue tax receipts for donations was in jeopardy.

Canada Without Poverty took the government to court after being told in 2016 it was going to lose registered status. The decision from the Superior Court of Ontario found the 10 per cent limit was a violation of the right to free expression and that charities such as Canada Without Poverty need to engage in political activity such as meeting with cabinet ministers.

A spokesman for Lebouthillier said some parts of the decision could have implications beyond charities’ political work, and that’s why the case is being appealed despite plans to amend the law.

Those concerns could include whether the case would mean the government must provide charitable status to any group that requests it without limits, and whether there is a constitutional right to charitable status.

Tim Gray, executive director of Environmental Defence, applauded the federal move to change the law, adding he thinks the court decision propelled the legislative action.

“I think the court case made a big impact,” said Gray, whose organization spent about $200,000 on legal fees to deal with a federal audit and a warning that it would lose charitable status.

The federal appeal of the decision is troubling, said Leilani Farha, executive director of Canada Without Poverty.