Income Tax Act Charter Challenge
Canada Without Poverty Launches Charter Challenge to Restrictions on Freedom of Charities to Promote Changes to Laws and Policies
Canada Without Poverty (CWP) has filed an application with Ontario Superior Court seeking a declaration that provisions in the Income Tax Act which restrict political activities of charities seeking to relieve poverty in Canada violate the Canadian Charter, particularly the right to freedom of expression (s. 2(b)) and the right to freedom of association (section 2(d)).
Section 149.1(6.2) of the Income Tax Act requires CWP and other registered charities to strictly limit any “political activities” so that they are “incidental” to the overall activities of the organization – understood as less than 10% of an organization’s time and resources. Based on court decisions, the Canada Revenue Agency (CRA) has defined ‘political activity’ as any activity that “explicitly communicates to the public that a law, policy or decision of any level of government inside or outside Canada should be retained, opposed, or changed.” Charities are required to monitor staff and members of their organization to determine if they have made public statements about current laws or policies, report annually to CRA on all such activities and to strictly limit them if they are to exceed allowable levels.
Canada Without Poverty, previously named the National Anti-Poverty Organization (NAPO) has been registered as a charity in Canada for 43 years. CWP is directed by a Board, all of whom have experienced poverty for a substantial period of their lives and its charitable purpose is to relieve poverty in Canada. “Relief of poverty” has long been accepted as a charitable purpose under charities law. “We have been granted charitable status to relieve poverty but when we try to do that, this legislation restricts what we can say, how often we can say it, and to whom we can say it. It prevents us from publicly speaking out about the laws and policies that have to be changed and it makes it impossible to meaningfully pursue our charitable purpose,” Leilani Farha, the Executive Director of CWP stated. “The real experts in the relief of poverty is our Board of Directors, and others in our network who have experienced poverty. These restrictions force CWP to prevent them from speaking out about the causes and solutions to poverty in Canada,” Ms Farha stated.
An affidavit sworn by Ms. Farha and filed at Superior Court notes that, in keeping with international declarations on poverty to which Canada is a signatory as well as Senate and parliamentary committee reports on poverty, effective strategies to relieve poverty will rely on the active participation of people living in poverty to identify barriers that prevent them from escaping poverty and to propose necessary changes to laws and policies. “The restrictions on participation by our members in public policy discussions related to poverty exacerbates their political marginalization. Canadian government and experts around the world have recognized the lack of equal political participation of people living in poverty as a primary cause of poverty and of misguided public policy,” Ms Farha stated.
In 2014 and 2015, CRA was given special budgetary allocations to rigorously enforce the political activities restrictions in the Income Tax Act. CWP was required to provide to CRA minutes of all meetings, copies of all emails exchanged by staff, volunteers, and board members, all publications and other communications for a three-year period. After poring through this documentation, CRA found that CWP members and staff frequently identified changes that needed to be made to laws or policies in order to alleviate poverty and publicly promoted the adoption of a national anti-poverty strategy. CRA also found that some of CWP’s activities “created an atmosphere conducive to advocating for changes to laws and policies”. CRA found that CWP’s political activities included hosting a dinner where people living in poverty ate a meal with members of parliament and other decision-makers and discussed their experiences of poverty and ideas about how to address it; organizing policy summits where people living in poverty could collaborate with social policy experts and academics to develop recommendations for addressing poverty; and offering an online course on Canada’s obligations to address poverty under international human rights law, where people living in poverty could join a community of learners to discuss topics of the day. The CRA also found that CWP published links on its website to newspaper articles and other materials which were critical of some of the government’s policies and recommended changes. The CRA found that all of these activities were political activities and made it clear that CWP must severely restrict the content of published materials, websites, emails, workshops, panels, public education campaigns, online courses or any public expression of views by its staff or members about laws, policies or decisions of the government in order to comply with the restriction of “political activities” of charities.
It has been suggested that the Income Tax Act does not prevent organizations seeking to relieve poverty from speaking out about laws and policies because all they have to do is relinquish their charitable status and then their organization would be free to express opinions about laws and policies. “It’s no answer to suggest that our members are free to give up CWP’s charitable status and create some other type of organization in order to be free to speak out about the need for changes to laws and policies,” Ms Farha stated. “Democracies don’t force people to relinquish the right to freely express opinions in exchange for benefits in the tax system. I don’t think we’d find it acceptable if the government said, for example, that in order for an individual to receive a tax deduction for medical expenses or for a corporation to receive a tax deduction for environmental upgrade, that the beneficiary must agree not to participate in public policy debates or criticize existing laws or policies. And if the government were to impose such restrictions, I don’t think it would be an acceptable defense to say they can have their freedom of expression back if they simply relinquish the tax benefit. The same is true of people living in poverty. CWP relies on charitable donations in order to work for the relief of poverty in Canada. Our donors want us to be effective and to speak out about the need for changes to laws and policies. Our members should have the same freedom of expression to speak out about poverty as other organizations have to speak out about their areas of interest and expertise,” Ms. Farha stated.
“CWP’s members find these restrictions on their freedom of expression and association to be totally unacceptable in a free and democratic society.” Ms Farha stated. “We are not arguing that there is any constitutional obligation on the government to provide a tax benefit for a particular purpose. We don’t have to: our purpose – to relieve poverty – has already been accepted as charitable. The question is, having accepted relief of poverty as a charitable purpose, is the government permitted, under the Charter of Rights and Freedoms, to restrict our members from speaking out about the changes to laws and policies that are necessary for our purpose to be achieved,” Ms Farha stated. “We think that’s an infringement of freedom of expression and association for people living in poverty and that’s why we filed this case.”
For the filings in the case see:
For more information, see the following media articles on CWP’s Charter challenge:
As It Happens interview (at 9:30 minutes in to part 3 of the show)
CBC: CBC Ottawa Morning interview (labelled as charity and politics case)
Hamilton Spectator: Legal Matters: Can Canadian charities use resources for political activities?
We are truly grateful for the dedicated work of our lawyers at McCarthy Tetrault, and the commitment and tireless efforts of Bruce Porter from the Social Rights Advocacy Centre. It is also important to acknowledge that this was made possible due to funding from Legal Aid Ontario, Test Case Funding.