Canadians recently marked the 35th anniversary of the Charter of Rights and Freedoms. Since it was enacted that document has profoundly altered the legal discourse – and the public’s perceptions – on many issues in Canadian law. Given this change, coupled with the centrality of free speech to the concept of fundamental rights, particularly the freedom of political speech, it is not surprising that the debate over regulatory treatment of charities, and more specifically the permissibility of charities engaging in political activities, has occasionally been framed as a Charter or rights question.
As appealing as this argument is, it is legally questionable. With respect to registered charities and their donors who enjoy preferential treatment under the Income Tax Act, the case law suggests that eligibility for status, and the advantages that registration confers, is a privilege, not a right. (Note here that the applicability of this jurisprudence to common law charities that do not seek federal registration is uncertain, and that the legal context for these groups may be subject to different considerations.)
That said, in Canada much of the case law on charities and rights concerns the Income Tax Act registered charity regime and its provisions addressing political activities. In that context, rights arguments with respect to eligibility for charitable status have not been well received. For example, in Vancouver Society of Immigrant and Visible Minority Women v. Minister of National Revenue, a Section 15 equality Charter argument was roundly rejected by Justice Iacobucci. Essentially it was held that it was always open to the stakeholders of a group rejected for charitable status to constitute a body that met all the common law and Income Tax Act requirements.
As long as federal charitable registration is associated with generous tax advantages, it is highly improbable that groups enjoying or aspiring to that status will ever be able to rely on the full scope of Charter rights and freedoms. Once it is understood that federal charitable status is not a right, the issue of the procedural fairness to which applicants for status or charity’s at risk of losing their registration are entitled comes into sharper focus. Unhappily, the law on that question, and the related one of the appeal rights of entity’s denied registration, is more ambiguous.
In October of last year, a Quebec applicant for charitable status initiated a proceeding in the Federal Court of Canada (“FCC”). This case may provide some additional guidance on the obligations of the Canada Revenue Agency (“CRA”) as the federal regulatory body with authority over granting and revoking status as a registered charity to act fairly and promptly in its decision making in this area.
The Institut de Recherché sur L’Autodétermination des Peuples et les Indépendances Nationales (“IRAI”) asserted in its filing that the CRA engaged in an abuse of process, demonstrated bias and improperly exercised its discretion by not rendering a timely decision on that entity’s application to be a registered charity.
The IRAI was constituted as a think tank mandated to do research into independence issues. It asserts in its submissions that similar organizations – notably including some with a federalist research orientation – have been granted status. While it is settled law in Canada that previous registration of similar bodies is not binding precedent on CRA when considering new applications, an allegation that the IRAI was not treated equitably with these other groups when its eligibility was assessed, if proven, could be more troublesome. It would potentially support an abuse of process or bias argument.
The IRAI proceeding is in the FCC. The normal venue and the appeal body specified in the Income Tax Act (“ITA“) for charitable registration and revocation disputes to be settled is the Federal Court of Appeal (“FCA”). IRAI is apparently taking the position that the FCC has jurisdiction in this matter because it alleges the organization suffered damages associated with the CRA’s failure to render a decision. Under the Crown Liability and Proceedings Act, the FCC has jurisdiction over claims for damages against federal government bodies.
Canadians recently marked the 35th anniversary of the Charter of Rights and Freedoms. It is perhaps not surprising that IRAI is opting for the FCC instead of the FCA. The ITA statutory provision giving the FCA jurisdiction provides little guidance on that Court’s role other than stating its authority over federal charity matters. The Court itself has rarely shown much inclination to address procedural matters at length, beyond looking broadly at whether CRA has acted reasonably in determining an entity’s eligibility for registration or moving to revoke a registered charity’s status.
The majority of FCA procedural holdings that do exist deal with revocations, and while the Court held in the 1980s case of Renaissance International v. M.N.R. that groups facing loss of registration are entitled to natural justice, it has not set out in detail the elements of equitable treatment in the context of an application.
As long as federal charitable registration is associated with generous tax advantages, it is highly improbable that groups enjoying or aspiring to that status will ever be able to rely on the full scope of Charter rights and freedoms. Most notably, they will likely never have the same degree of protected speech available to others. It is reasonable to expect, however, that they be given fair and equitable treatment in their dealings with the CRA. Regardless of outcome, if the IRAI proceeding in the FCC can advance that goal, it will have been worthwhile.
About Peter Broder
