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Revenue minister suspends political-activity audits of charities

The Liberal government is suspending the few remaining political-activity audits of charities after an expert-panel report recommended removing a political gag order imposed on them by the Conservatives in 2012.

As an immediate first step to respond to the panel’s recommendations, National Revenue Minister Diane Lebouthillier “has asked the CRA to suspend all action in relation to the remaining audits and objections that were part of the Political Activities Audit Program, initiated in 2012,” a release Thursday said.

The panel report, also released Thursday, and the suspension appear to end a long chill for charities that began in 2012, when the Conservative government launched 60 political-activity audits, starting with environmental groups that had criticized federal energy and pipeline policies.

Fatal Plane Crash Memorial 20161028

Prime Minister Stephen Harper’s government ordered a series of 60 political-activity audits of charities in 2012, starting with environmental groups who had criticized energy and pipeline policies. (Jeff McIntosh/The Canadian Press)

A spokeswoman for the minister, Chloe Luciani-Girouard, says Thursday’s suspension affects 12 audits, of which seven have resulted in an intention to revoke charitable status.

The infamous program cost environmental, anti-poverty, human-rights and religious charities significant staff resources and legal fees, and brought an “advocacy chill” to the sector, with many groups self-censoring lest they be caught in CRA’s net or annoy auditors.

The Liberal party campaigned in the 2015 election to end the “political harassment” of charities, but once elected did not quite end the program. Instead, it cancelled six of the political-activity audits that were yet to be launched, but allowed audits underway to continue.

That left groups such as Environmental Defence and Canada Without Poverty, which were deemed too political by CRA, still under immediate threat of losing their charitable status. Thursday’s announcement lifts that threat, at least until the government responds to the panel recommendations.

The five-member panel, chaired by Marlene Deboisbriand on the board of Imagine Canada, says Canada’s charity law and regulations are too restrictive and vague. It calls for changes to the Income Tax Act to delete any reference to “political activities” with regard to charities.

Would change enforcement

The change would be “to explicitly allow charities to fully engage, without limitation, in non-partisan public policy dialogue and development, provided that it is subordinate to and furthers their charitable purposes.” The CRA would also dramatically change its enforcement activities.

The panel report, based on wide consultations last fall, also said there was broad consensus in the charity sector that partisan activities should remain forbidden.

The panel recommended that a charity’s political activities, whether pressing for a change in government policy or buttonholing a politician, be judged on whether they further the group’s charitable purpose.

The proposed changes would eliminate current rules that restrict a charity’s political activities to 10 per cent of their resources, and are unclear on definitions of what constitutes a political act.

“Problems with the legislative framework and its administration have left the sector and its regulator stuck on a merry-go-round of consultation, clarification, and concern for nearly four decades,” says the report.

“We believe it is time to break this cycle, and this is what we intend with the recommendations in this report.”

Canada Revenue Agency

The Canada Revenue Agency is suspending action on 12 ongoing political activity audits of charities. (Canada Revenue Agency)

Tim Gray, executive director of Environmental Defence, welcomed the report and suspension.

“It’s what I was anticipating,” he said from Toronto. “They’ve listened to the public, they’ve listened to the charitable sector. I’m really pleased that the government is going to respond positively to the report.”

Environmental Defence, among the first charities targeted by CRA in its political-activity audit program, says it has spent about $ 500,000 in staff resources and legal fees defending itself over the last five years.

The panel heard from 167 individuals in seven cities, and received 420 unique online submissions (apart from people signing online petitions). The report’s recommendations are most closely modelled on modern charity law in the United Kingdom.

Lebouthillier said she has shared with panel report with Finance Minister Bill Morneau, whose department is responsible for the Income Tax Act, but did not indicate when the government will officially respond to the findings.

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CBC | Politics News