Date: 20081211
Docket: A-80-08
Citation: 2008 FCA 396
CORAM: RICHARD
C.J.
DESJARDINS J.A.
NOËL
J.A.
BETWEEN:
HOSTELLING INTERNATIONAL CANADA - ONTARIO EAST REGION
Appellant
and
MINISTER OF NATIONAL REVENUE
Respondent
REASONS FOR JUDGMENT
RICHARD C.J.
[1]
This is a
statutory appeal pursuant to subsections 172(3) and 180(1) of the Income Tax
Act, R.S.C. 1985 (5th Supp.), c.1 (the ‘Act’) from the notice of
the Minister’s intent to revoke the charitable registration of the appellant,
dated July 28, 2006.
[2]
The
Minister’s decision was made pursuant to paragraphs 149.1(2)(a) and 168(1)(a)
of the Act:
|
149.1 (2) The Minister may, in the manner described in section 168, revoke
the registration of a charitable organization for any reason described in
subsection 168(1) or where the organization
(a) carries on a business that is not a related
business of that charity; …
|
149.1 (2) Le ministre peut, de la façon prévue
à l’article 168, révoquer l’enregistrement d’une oeuvre de bienfaisance pour
l’un ou l’autre des motifs énumérés au paragraphe 168(1), ou encore si l’oeuvre
:
a) soit exerce une activité commerciale qui n’est
pas une activité commerciale complémentaire de cet organisme de bienfaisance;
[…]
|
|
168. (1) Where a registered charity or a registered Canadian amateur
athletic association …
(b) ceases to comply with the
requirements of this Act for its registration as such, …
the Minister may, by registered mail, give notice to
the registered charity or registered Canadian amateur athletic association
that the Minister proposes to revoke its registration.
|
168. (1) Le ministre peut, par lettre recommandée, aviser un organisme de
bienfaisance enregistré ou une association canadienne enregistrée de sport
amateur de son intention de révoquer l’enregistrement lorsque l’organisme de
bienfaisance enregistré ou l’association canadienne enregistrée de sport
amateur, selon le cas : […]
b) cesse de se conformer aux exigences de la présente
loi relatives à son enregistrement comme telle; […]
|
[3]
The
appellant operates a hostel located in the building which formerly housed the
Carleton County Gaol in Ottawa. It first received
registered charity status effective June 13, 1973 under the name “National
Capital Hostelling Association”. The appellant’s status has been revoked twice
in the past for failure to file its annual returns. In both instances, the
appellant reapplied for charitable registration and it was granted by the CRA.
[4]
The
appellant’s Letters Patent state the following objects:
a. To
promote the education of all, but especially young people, by encouraging in
them a greater knowledge, love and care of the countryside and an appreciation
of the cultural values of towns and cities in all parts of the world, and as
ancillary thereto to provide hostels or other accommodation in which there
shall be no discrimination based on race, nationality, colour, religion, class,
political opinions, sex or age, and thereby, to develop a better understanding
between persons – both home and abroad.
b. To
promote the development, operation and use of hostels for recreational, cultural,
and educational programmes, travel and exploration in co-operation with the
Ontario Hostelling Association – Association Ontarienne de L’Ajisme and the
Canadian Hostelling Association – Association Canadienne de L’Ajisme
c.
For
the objects aforesaid, to accept donations, gifts legacies and bequests.
[5]
Subsequent
to an audit of the appellant for its fiscal period ended March 31, 2001, the
respondent raised various concerns about the appellant’s compliance with
certain provisions of the Act. Following an exchange of correspondence between
the appellant and the respondent, on July 28, 2006, the Minister gave
the appellant notice of its intent to revoke its charitable registration.
[6]
After
reviewing the objections made by the appellant, the Minister confirmed its
intent to revoke the appellant’s registration on January 30,
2008.
The Minister found that the appellant had ceased to comply with the
requirements of charitable registration as set out in subsection 149.1(1) of
the Act. Specifically, the Minister found that the appellant failed to devote
all of its resources to charitable activities since the provision of
accommodation in the context of youth hostels is not a charitable activity.
Furthermore, the Minister found that the appellant carries on a commercial
business that does not meet the requirements of a ‘related business’ under
149.1(1) of the Act.
[7]
The
Minister’s conclusion that the appellant ceased to qualify for registration is
a conclusion of mixed fact and law reviewable on a standard of reasonableness,
as per Dunsmuir v. New
Brunswick,
2008 SCC 9.
[8]
The
requirements for charitable registration under the Act were outlined by Justice Iacobucci
in Vancouver Society of Immigrant and Visible Minority Women v. M.N.R.,
[1999] 1 S.C.R. 10, at paragraph 159:
(1) the purposes of the organization must be charitable,
and must define the scope of the activities engaged in by the organization; and
(2) all of the organization’s resources must be devoted to
these activities unless the organization falls within the specific exemptions
of s. 149.1(6.1) or (6.2).
[9]
The
Supreme Court of Canada has held that in order for the objects of an
organization to be charitable at common law they must fall into one of the four
categories set out by the House of Lords in Commissioners for Special Purposes of the Income Tax
v. Pemsel, [1891] A.C. 531
(see e.g. A.Y.S.A. Amateur
Youth Soccer Association v. Canada (Revenue Agency), 2007 SCC 42 at para. 26; Vancouver Society, at para. 144; Guaranty Trust Co. of Canada v. Minister of National Revenue, [1967]
S.C.R. 133). The four categories include: the relief of poverty, the
advancement of education, the advancement of religion, and ‘other purposes
beneficial to the community’. All of the organization’s activities must be in
furtherance of its charitable purposes in order for those activities to be
considered charitable under the Act (Vancouver Society, at para. 152).
[10]
The appellant claims
that facilitating travel by providing low-cost accommodation is an activity
that promotes the advancement of education. In Vancouver Society,
Justice Iacobucci discussed the scope of this Pemsel category. At
paragraph 171, he stated:
To my mind,
the threshold criterion for an educational activity must be some legitimate,
targeted attempt at educating others, whether through formal or informal
instruction, training, plans of self-study, or otherwise. Simply
providing an opportunity for people to educate themselves, such as by making
available materials with which this might be accomplished but need not be, is
not enough.
[11]
The record
before us confirms the Minister’s conclusion that the appellant did not carry
out its activities in furtherance of the advancement of education or any other
recognized charitable purpose. Simply providing an opportunity for people to
educate themselves by making available tourist accommodation is insufficient
for the activity to be regarded as charitable under the Act. Accordingly, we
find that the Minister’s decision to revoke the registration of the appellant was
reasonable.
[12]
The
appellant submitted that the appropriate procedure for the Minister to have
taken was to annul the charity’s registered status pursuant to subsection
149.1(23), rather than to revoke it. The record indicates that the Minister
was prepared to do so with the consent of the appellant, which was not given.
[13]
Subsection
149.1(23) of the Act provides that annulment is a discretionary procedure that
may be followed by the Minister in cases where the organization was registered
by the Minister in error or where, solely due to a change in law, the
organization has ceased to be a charity.
[14]
The
Minister did not proceed on the ground that the organization was registered in
error but on the ground that the organization had ceased to comply with the requirements
of subsection 149.1(1) of the Act in that it failed to devote all of its
resources to charitable activities.
[15]
Accordingly,
the appeal will be dismissed with costs to the respondent.
"J.
Richard"
“I
agree
Alice Desjardins J.A.”
“I
agree
Marc
Noël J.A.”
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