Political Activities – Recent Changes to Income Tax Act

Public policy

PhiLab has written an excellent article on the changes to the Income Tax Act (ITA) titled: Towards a reform in the legal framework regulating the political activities of registered charities – Four reactions from the philanthropic sector on the abolition of the 10% limitation.  You can read the full article HERE.

I won’t even attempt to be as thorough, but I will summarize by saying the Federal Government is introducing a new set of rules that will govern how a charitable organization can interact with the state and citizens using political activities and political advocacy.  Previously, charitable organizations were limited allow for only 10% of activities to be considered political activities.  The new rules would allow charitable organization to engage without limitations.

Why does this matter? Well, for some time lawmakers feared that political institutions could operate under the guise of a charity (including its taxable benefits), in order to push a political agenda. The fear was these ‘big-P’ Political organizations would hurt the public’s view of charities and their work, resulting in less support and fewer financial gifts.

Is this fear valid? Only time will tell – but I would argue that it is more likely that registered charities will be able to have their voices heard and will more easily be able to inform the public and politicians about social, cultural, economic, or environmental injustices they face on the front lines of human services every day.

How did we get here? Canada Without Poverty challenged the constitutionality of article 149.1 of the Income Tax Act (ITA) that limited political activities to 10% in the Ontario Superior court. Canada Without Poverty argued the article infringed on Article 2 of the Charter of Rights and Freedoms by reducing the freedom of expression of Canada Without Poverty’s members, staff, volunteers, and board members.

Why was 10% limitation bad? The problem with the current definition of political activities is that there was no clear definition what was or wasn’t political activities.  Many organizations thought if you didn’t ask your public for a call to action (aka. Call your member of parliament to tell him why X concerns you), you were fine.  The previous conservative government considered much more to be political activities.

This became a problem for Canada Without Poverty.  Their membership are people living in poverty, their board members are people who are, or previously lived in poverty, and their staff are experienced advocates for anti-poverty legislation.  As a result, a sitting government – or opposition party – may reach out to Canada Without Poverty and ask “what do you think about this policy? Are there any poverty implications we haven’t considered.” This would be considered POLITIAL ACTIVITIES.  But, according to the previous Conservative Government, so many more things would be considered political activities: if the staff informed the board of this request; if a board member told their family or shared the information at a community networking meeting; any research the staff would undertake to explore poverty implications; creating the presentation or report for government; providing an update at a board meeting about how the meeting went with the government; and any emails that mention any policy, direction of the government, a desired outcome the organization is looking for in a policy.

It’s easy to see how an organization like Canada Without Poverty, who is attempting to create systemic changes to poverty, nearly lost their charitable status over political activities.  When your organization is about making changes, nearly everything you do is about political activities.  Therefore Canada Without Poverty argued the 10% rule fundamentally impeded members, staff, volunteers, and board members from their freedom of expression.

I know what your thinking – who does this really affect? You may be correct to assume the organizations who may be completing more than 10% of political activities might be a relatively small number of – those looking to make changes.  The proposed rule changes might not mean a whole lot to how your organization operates. To learn more how the changes may affect you, view Imagine Canada’s FAQ’s HERE.

With such a small number of charities affected, is this really the beginning of the end? Will political organizations use the benefits of charitable status to disrupt the regulatory framework and destroy the credibility of the charitable sector as a whole? Only time will tell which prediction will come true – catastrophe or improved ability to operate – I am going to remain an optimist.  As someone who has supported Canada Without Poverty for years, I am confident allowing these organizations to conduct business relevant to their mission without limitation can only help inform the state, public, and lawmakers of the impact of regulations and acts.  The charitable sector has historically been the drivers of change in our community with the expertise and knowledge in their field.  This rule change will allow them to share that knowledge and expertise far and wide to anyone who wish to learn form them.

One Comment to “Political Activities – Recent Changes to Income Tax Act”

  1. I cannot thank you enough for the post.Really looking forward to read more. Cool.

Leave a Reply

Your email address will not be published. Required fields are marked *