Draft legislation that would lift the limits placed on non-partisan political activities by charitable organizations are a welcome change, says the CBA’s Charities and Not-for-Profit Law Section.
“These proposals will hopefully afford charities more freedom to conduct non-partisan political activities, such as public advocacy, than in the past, which we support,” the Section says in a submission to Finance Canada’s Tax Policy Branch.
Still, the Section has several concerns about the proposals. For example, the new definition of charitable organization retains language that has created “considerable uncertainty.” Plus the proposed legislation continues to use the phrase “charitable activities,” which it was intended to eliminate, and perpetuates “unnecessary confusion about the distinction between a purpose and an activity.” The Section recommends the definition of charitable organization mirror that of charitable foundation, and that any reference to charitable activities be removed.
While the provisions to be repealed include the criterion that political activities had to be “ancillary and incidental” to the charitable purposes of the organization, “ancillary and incidental” remains part of the common law, and the current CRA policy statement on political activities contains interpretations of the meaning of those words.
“(I)t leads to a concern that CRA will have to rely on the common law definition of “incidental” … The term incidental is vague, and little case law actually emanates from Canada’s courts concerning political activities,” the Section writes. It also notes that a draft guidance on public policy advocacy for charities posted by CRA in October “heavily relies on the concept of ‘incidental’ without providing any meaningful definition of this concept, other than the vague notions that will permit overly subjective interpretations by the CRA.”
The Section points out that the draft legislation addresses only one of four recommendations made by a consultation panel studying the topic, and then addresses it only in part. The Section suggests that the proposed legislation adopt the part of that recommendation that says the prohibition on partisan political activities be clarified to include elected officials along with political parties or candidates for public office.
“The recommendation was also to delete the term ‘indirect’ before the term partisan activities. ‘Indirect’ retains much of the subjectivity and uncertainty that has created difficulties for charities. The Panel suggested the section prohibit direct partisan activities and we believe this aspect of the recommendation should be adopted.”