Charities get antsy as Liberal government remains silent on reform plans

The federal Liberals campaigned on a promise to end the "political harassment" of charities but more than two years after the 2015 election, charities initially targeted by the Harper government say they're still waiting for relief.

The Trudeau government has yet to respond to a report it has been sitting on since March 30 last year, which called for major tax-law changes to allow charities to freely carry out political activities that further their causes.

The report, commissioned from five outside experts, was hailed at the time as ending an advocacy chill begun in 2012, when the Conservative government launched audits of dozens of charities to determine whether their political activities exceeded a 10 per cent threshold. Many were environmental groups that had criticized energy and pipeline policies.

National Revenue Minister Diane Lebouthillier last May suspended but did not end the remaining 12 audits in the program, pending the government's response to the experts' recommendations.

That response had been expected last summer, but there's been a long silence from Finance Canada and the Canada Revenue Agency (CRA), together responsible for revising relevant sections of the Income Tax Act.

"We didn't expect to be waiting this long," said Tim Gray of Environmental Defence, among the 12 groups under CRA threat of losing charitable status. "It just creates more uncertainty. Are we just back to where we were before?"

'Foot-dragging'

A spokesperson for Canada Without Poverty, another threatened charity, also questioned what she called "foot-dragging."

"Of course, the government should explore the fiscal implications of changes to the Income Tax Act and regulation of charities, but not cause undue delay," said Leilani Farha, "especially not at the expense of human rights and free expression."

Lebouthillier's office did not explain why the government response is taking so long, nor did it provide a timeline. "This is an important process, and the government will take the time required to make sure to get it right," said John Power.

Several of the panel members who wrote the March 30 report told CBC News they had not been further contacted by the government, and were not aware of the reasons for the delay.

We've had indications from Finance (Canada) that there's a reluctance to proceed withthis.- Tim Gray, Environmental Defence

Gray said the sticking point appears to be Finance Canada. "We've had indications from Finance that there's a reluctance to proceed with this, but they haven't given us reasons why not," he said.

Early hopes raised by Liberal public statements against political-activity audits, in the 2015 election and the ministerial mandate letter to Lebouthillier, were deflated when the minister in 2016 said 24 active CRA audits begun under the Conservatives would continue. She said six of the 60 audits in the program, that had not yet begun, would be cancelled, however.

Months later, Canada Without Poverty launched a Charter challenge of the audits, saying the section of the Income Tax Act restricting political activities for charities infringed on freedom of expression.

The challenge, filed in August 2016, is to be heard in Toronto on April 23. The group says it is pressing ahead with the legal action in the absence of any relevant changes to the Act.

Charity groups widely agree that partisan activities must remain banned the endorsement of particular candidates or parties, for example but that political activities should be part of their work to bring about changes in society to advance human rights, education, and religion and to fight poverty.

Too vague

Currently, the law forbids charities from devoting more than 10 per cent of their resources to political activities, on penalty of losing the charitable status that allows them to issue tax-deduction receipts to donors, important for fundraising. Critics have said the law is too vague on the definition of "political."

Seven of the 12 political-activity audits currently under suspension have resulted in CRA declaring its intention to revoke charitable status.

The expert panel heard from 167 individuals in seven cities, and its report is closely modelled on charity law in the United Kingdom. (By contrast, the Australian government recently stepped up its pursuit of charities engaging in politics.)

The panel recommended a change in the tax law "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."

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