Date: 20100218
Docket: A-215-08
Citation: 2010 FCA 51
CORAM: SEXTON
J.A.
EVANS
J.A.
SHARLOW
J.A.
BETWEEN:
INTERNATIONAL
PENTECOSTAL MINISTRY
FELLOWSHIP
OF TORONTO (IPM)
Appellant
and
THE
MINISTER OF NATIONAL REVENUE,
HER
MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT OF THE
COURT
(Delivered from the Bench at Toronto, Ontario, on February 18,
2010)
SEXTON_J.A.
Background
[1]
The
Appellant was incorporated on November 8, 1990. It was registered as a
charitable organization under the Income Tax Act, R.S.C. 1985, c. 1 (5th
Supp.) (“the ITA”) as of January 1, 1991. In November 2005, the Respondent
undertook an audit of the Appellant for the 2002 and 2003 fiscal periods. The
auditor concluded that the Appellant stood in contravention of a number of its
obligations under the Act, including the need to maintain adequate books
and records, issue donation receipts, meeting a prescribed standard, accurately
report all tax receipted gifts, and retain documents establishing its activities
and expenditures outside Canada.
[2]
On July 4,
2006, the Respondent notified the Appellant of the results of the audit and
invited the Appellant to respond. The Appellant replied with a request for
additional time to formulate its response. On September 26, 2006, the
Respondent sent two letters to the Appellant. The first letter notified the
Appellant of the Respondent’s intent to revoke the Appellant’s charitable
status. The second letter granted the Appellant an extension to submit its
representation until October 6, 2006.
[3]
On October
5, 2006, the Appellant filed a Notice of Objection. The Notice of Objection
stated that the Appellant had changed accounting firms and would again need
more time to respond to the results of the audit. On February 8, 2008, the
Respondent informed the Appellant of its intent to confirm the notice of intent
to revoke, and allowed the Appellant until March 10, 2008 to make any further
submissions. The Appellant replied on March 14, 2008 and explained
discrepancies and errors in the receipts it issued, as well as problems with
its books.
[4]
On April
9, 2008, the Respondent wrote to the Appellant. It stated that it had reviewed
the Appellant’s subsequent submissions and that on the basis of the audit and
subsequent correspondence, it confirmed the proposal to revoke the Appellant’s
charitable registration. The Appellant now seeks to appeal that revocation.
Issues
[5]
The
Appellant makes two arguments. First, it argues that the regulation of
charities is ultra vires the federal Parliament because exclusive legislative
authority with respect to the regulation of charities lies with the provinces.
Therefore, the Respondent exceeded its jurisdiction and its decision is void ab
initio. Second, it argues that the Respondent failed to observe its own
guidelines when it decided to revoke the Appellant’s charitable status without
first attempting to address the non-compliance through education, a compliance
agreement, and a sanction.
Analysis
1. Jurisdiction
[6]
An
allegation of lack of constitutional authority to make a decision is a true
jurisdictional issue contemplated by the Supreme Court of Canada in Dunsmuir
v. New
Brunswick,
[2008] 1 S.C.R. 190, 2008 SCC 9 at paragraph 59 (“Dunsmuir”). Jurisdictional
issues like the instant are reviewable on a standard of correctness.
[7]
The
authority to make laws for the regulation of charities is held exclusively by
the provinces under subsection 92 (7) of the Constitution Act, 1867. Under subsection 91 (3) of the Constitution Act, 1867, the
Parliament of Canada has the authority to make laws for “the raising of Money
by any Mode or System of Taxation.” Therefore, the resolution of this case
turns on whether the registration and deregistration of charities under the ITA
relates to the regulation of charities under subsection 92 (7) or to taxation
under subsection 91 (3).
[8]
We have not been persuaded that there is any
merit to the Appellant’s argument that the provisions of the ITA dealing with
the registration and deregistration of charities are an unconstitutional
infringement on provincial legislative authority. In our view, these provisions
relate, in their pith and substance, to federal taxation, and accordingly they
are intra vires the Parliament of Canada under subsection 91 (3) of the Constitution
Act, 1867. Both the advantages of registration and the drawbacks of
revocation relate solely to the tax treatment of charities and their donors.
They do not impermissibly affect the affairs of charities in any other way, nor
do they impede provinces from otherwise regulating charities.
[9]
We are therefore of the opinion that the
Respondent acted within its jurisdiction when it revoked the Appellant’s
charitable status.
2. Did the Respondent fail to follow its
own guidelines and err in so doing?
[10]
The
Appellant also argues that the Respondent ignored its own guidelines by
revoking the Appellant’s charitable status without encouraging compliance
through education, sanctions, and a compliance agreement. The Respondent’s
exercise of the statutory discretion to revoke registration is reviewable on a
standard of reasonableness.
[11]
In this case, the Respondent provided specific
reasons as to why the Appellant’s practices failed to comply with the Act.
Ample time was given to the Appellant to bring its practices into compliance.
The Appellant failed to adequately respond.
[12]
The Respondent’s decision falls squarely within
the range of acceptable outcomes. While the Appellant alleges that the
Respondent failed to follow its own guidelines, on this record, it was
reasonably open to the Minister to find the breaches sufficiently serious as to
warrant revocation.
Conclusion
[13]
We
therefore hold that the Respondent’s actions did not exceed its jurisdiction
and were reasonable under the ITA. We would dismiss the appeal with costs to
the Respondent.
“J. Edgar Sexton”
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-215-08
(APPEAL FROM THE NOTICE OF INTENT TO
REVOKE, GHISLAINE LANDRY, MANAGER, TAX AND CHARITIES APPEALS DIRECTORATE, DATED
APRIL 9, 2008, DOCKET NO. 0907774)
STYLE OF CAUSE: INTERNATIONAL PENTECOSTAL
MINISTRY FELLOWSHIP
OF TORONTO (IPM) v. THE
MINISTER OF NATIONAL REVENUE AND HER MAJESTY THE QUEEN
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: February 18, 2010
REASONS FOR JUDGMENT OF THE COURT BY: (SEXTON, EVANS & SHARLOW JJ.A.)
DELIVERED FROM THE BENCH BY: SEXTON J.A.
APPEARANCES:
|
Jide Oladejo
Simeon A. Oyelade
|
FOR THE APPELLANT
|
|
Joanna Hill
|
FOR THE RESPONDENT
|
SOLICITORS OF RECORD:
|
Barrister and
Solicitor
Toronto, Ontario
|
FOR THE
APPELLANT
|
|
John H. Sims,
Q.C.
Deputy Attorney General of Canada
Ottawa, Ontario
|
FOR THE RESPONDENT
|
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