Docket: A-244-15
Citation:
2016 FCA 193
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CORAM:
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WEBB J.A.
SCOTT J.A.
DE MONTIGNY J.A.
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BETWEEN:
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CREDIT
COUNSELLING SERVICES OF ATLANTIC CANADA INC.
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Appellant
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and
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MINISTER OF
NATIONAL REVENUE
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Respondent
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REASONS
FOR JUDGMENT
WEBB J.A.
[1]
The issue in this appeal is whether activities
related to the “prevention of poverty” are
charitable activities for the purposes of the Income Tax Act, R.S.C.
1985, c.1 (5th Supp.) (the Act).
[2]
Credit Counselling Services of Atlantic Canada
Inc. is appealing the decision of the Minister of National Revenue (the
Minister) dated April 21, 2015 to confirm the Notice of Annulment of
Registration (the Notice) issued on July 12, 2013.
[3]
The Notice was issued because the Minister
determined that the purposes and the activities of the Appellant were not
exclusively charitable as the prevention of poverty was not a recognized
charitable purpose.
[4]
For the reasons that follow, I would dismiss
this appeal.
I.
Facts
[5]
The Appellant was incorporated under the Canada
Corporations Act, R.S.C. 1970, c. C-32 in 1993. The objects of the
Appellant were stated to be:
(a) The
prevention of poverty;
(b) To
provide professional financial and debt counselling to the community;
(c) To develop
and promote educational programs for the public on family money management,
budgeting and use of credit;
(d) To conduct and fund research on
credit-related concerns; and
(e) To collect and
disseminate data and information on consumer credit issues to the public.
[6]
By a letter dated October 21, 1993, the
Appellant was informed by Revenue Canada Customs, Excise and Taxation that it
qualified as a registered charity for the purposes of the Act.
[7]
Over the next several years the Appellant
carried on its activities of providing credit counselling services, an
education outreach program and a debt management program.
[8]
The debt management program is available to
consumers who are in serious financial difficulties but who are employed and
have assets. The Appellant negotiates a repayment of the debts with the
creditors of the consumer.
II.
Decisions of the Minister
[9]
The notice of confirmation dated April 21, 2015
confirmed the earlier decision of the Minister to annul the registration of the
Appellant as a registered charity.
[10]
In the earlier decision dated July 12, 2013, the
Minister annulled the registration of the Appellant because, in the Minister’s
view, the purposes and activities of the Appellant were not exclusively
charitable. The Minister focused on the primary objective of the Appellant –
the prevention of poverty – and concluded that this was not a recognized
charitable purpose. The Minister noted that credit counselling may, in certain
situations, “contribute to the charitable purpose of
relieving poverty”. However, since the Appellant’s services were not
limited to individuals who were poor, its services were more properly
classified as relating to the prevention of poverty rather than the relief of
poverty.
III.
Standard of Review
[11]
In Prescient Foundation v. Minister of
National Revenue, 2013 FCA 120, 2013 D.T.C. 5101, this Court confirmed
that:
12. In an
appeal from a decision of the Minister confirming a proposal to revoke a
registration of a charity brought pursuant to paragraph 172(3) of the Act,
extricable questions of law, including the interpretation of the Act, are to be
determined on a standard of correctness. On the other hand, questions of fact
or of mixed fact and law, including the exercise of the Minister's discretion
based on those facts and the law as correctly interpreted, are to be determined
on a standard of reasonableness…
[12]
There is no reason why different standards of
review would be applicable to a decision of the Minister to annul a
registration. Therefore, extricable questions of law will be reviewed on a
correctness standard. Whether activities related to the prevention of poverty
are charitable activities for the purposes of the Act is a question of
law.
IV.
Analysis
[13]
Only charitable organizations or charitable
foundations can be registered charities for the purposes of the Act
(definitions of “registered charity” in subsection
248(1), and “private foundation” and “public foundation” in subsection 149.1(1) of the Act).
A “charitable organization” is defined in
subsection 149.1(1) of the Act, in part, as follows:
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charitable organization, at any particular time, means an
organization, whether or not incorporated,
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oeuvre de bienfaisance Est une oeuvre de bienfaisance à un moment
donné l’oeuvre, constituée ou non en société :
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(a) all the resources of which are devoted to charitable
activities carried on by the organization itself,
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a) dont
la totalité des ressources est consacrée à des activités de bienfaisance qu’elle
mène elle-même;
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…
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[…]
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[14]
The Appellant will not meet this test unless the
activities related to the prevention of poverty are included as charitable
activities. Although this provision is expressed in terms of activities and not
purposes, the cases addressing what will be a charitable purpose are directly
relevant since an activity could not be a charitable activity if it was not
being carried out for a charitable purpose.
[15]
It is well recognized that charitable purposes
include the following:
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the relief of poverty;
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the advancement of education;
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the advancement of religion; and
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certain other purposes beneficial to the
community, not falling under any of the preceding heads.
(A.Y.S.A.
Amateur Youth Soccer Association v. Canada Revenue Agency, 2007 SCC 42, [2007]
3 S.C.R. 217, at paragraph 26) (A.Y.S.A.)
[16]
The Appellant did not refer to any cases that
have held that the relief of poverty will include the prevention of poverty. To
satisfy the requirement that a purpose is for the relief of poverty, the person
receiving the assistance must be a person who is then in poverty. Poverty is a
relative term. Therefore, it is possible that in some situations providing
assistance through counselling or by other means to individuals in serious
financial trouble may be considered to be relieving poverty, even if the
individuals are not then destitute (Vancouver Society of Immigrant and
Visible Minority Women v. Minister of National Revenue, [1999] 1 S.C.R. 10,
169 D.L.R. (4th) 34, at paragraph 185) (Vancouver Society).
[17]
However, it is clear that the Appellant is
assisting many consumers who are employed and who have assets and therefore
would not necessarily, as of the time of receiving the assistance, be
considered to be in poverty. In 2010 the Appellant assisted consumers in paying
over $10 million to their creditors under the debt management program. There is
no indication that the Appellant screened these clients and only offered its
services to those individuals who would be considered to be “poor” as
determined for the recognized charitable purpose of the relief of poverty. The
activities of the Appellant can best be described as related to the prevention
of poverty.
[18]
In the United Kingdom, Parliament adopted the Charities
Act 2011, 2011, c. 25 and in so doing included the prevention of poverty (in
addition to the relief of poverty) as a charitable purpose. In effect, the
Appellant is asking this Court to do that which required an act of the UK
Parliament to do. In my view, just as in the United Kingdom, it will require an
act of Parliament to add the prevention of poverty as a charitable purpose.
[19]
As a result, in my view, the prevention of
poverty is not a charitable purpose and hence the Appellant cannot succeed on
this ground.
[20]
The Appellant also argues that it should succeed
under the fourth category of purposes beneficial to the community.
[21]
In Vancouver Society the Supreme Court outlined
the requirements for this fourth category of charitable purposes:
175 In Native
Communications Society, supra, at pp. 479-80, the Federal Court of Appeal
set out certain "necessary preliminaries" for the determination of a
charitable purpose under the fourth category of Lord Macnaghten's formulation.
As Stone J.A. put it, the purpose must be beneficial to the community "in a
way which the law regards as charitable" by coming within the "spirit
and intendment" of the preamble to the Statute of Elizabeth if not
within its letter, and whether a purpose would or may operate for the public
benefit is to be answered by the court on the basis of the record before it and
in exercise of its equitable jurisdiction in matters of charity.
176 In other words, more is required
than simple "public benefit", in the ordinary sense of that term, to
bring a purpose within the fourth head of Pemsel. In Positive Action
Against Pornography, supra, at p. 352, Stone J.A. stressed that the task of
the court under this heading is relatively narrow; it is not called upon
"to decide what is beneficial to the community in a loose sense, but only
what is beneficial in a way the law regards as charitable"
(emphasis added). Thus, it is not sufficient to assert, as the Society has,
that, by helping immigrant and visible minority women to obtain employment, it
creates a "level playing field", which is in the public benefit because
it is "in the public interest of immigrants and in fact of all Canadians
that immigrants obtain employment as quickly as possible". Rather than
laying claim to public benefit only in a loose or popular sense, it is
incumbent upon the Society to explain just how its purposes are beneficial in a
way the law regards as charitable.
177 In D'Aguiar, supra, it was
recognized that the guidance provided by the common law in this area is not
particularly clear. I agree. The requirement that the purposes benefit the
community "in a way the law regards as charitable" is obviously
circular, and the various examples enumerated in the preamble to the Statute
of Elizabeth seem to lack a common character or thread on which to base any
coherent argument from analogy. That notwithstanding, however, the Privy
Council in that case set out what is in my view a useful approach to the
assessment of an organization's purposes under the fourth head (at p. 33):
[The Court] must first consider the
trend of those decisions which have established certain objects as charitable
under this heading, and ask whether, by reasonable extension or analogy, the
instant case may be considered to be in line with these. Secondly, it must
examine certain accepted anomalies to see whether they fairly cover the objects
under consideration. Thirdly — and this is really a cross-check upon the others
— it must ask whether, consistently with the objects declared, the income and
property in question can be applied for purposes clearly falling outside the scope
of charity; if so, the argument for charity must fail.
To this I would add the general requirement,
outlined in Verge v. Somerville, supra, at p. 499, that the purpose must
also be "for the benefit of the community or of an appreciably important
class of the community" rather than for private advantage.
[22]
In order to qualify under the fourth heading,
the purpose must be beneficial to the community in a way the law regards as
charitable. The Appellant has not established that its services, aimed at the
prevention of poverty, would benefit the community in a way that is considered
charitable. It seems clear that those individuals who have been assisted in
paying down their debts and better managing their finances have benefited but
it is far from clear why this is not a private advantage enjoyed by these
individuals or how this would be beneficial to the community in a way that the
law regards as charitable.
[23]
As a result, in my view, the Appellant has
failed to establish that the Minister made any error in annulling the
registration of the Appellant as a registered charity and I would dismiss this
appeal, with costs.
"Wyman W. Webb"
“I agree.
A.F. Scott
J.A.”
“I agree.
Yves de
Montigny J.A.”
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