Date: 20110607
Docket: A-75-10
Citation: 2011 FCA 192
CORAM: NADON
J.A.
LAYDEN-STEVENSON J.A.
MAINVILLE
J.A.
BETWEEN:
NEWS TO YOU CANADA
Appellant
and
MINISTER OF NATIONAL REVENUE
Respondent
REASONS FOR JUDGMENT
MAINVILLE J.A.
[1]
The
appellant appeals to this Court pursuant to paragraph 172(3)(a.1) of the
Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (the “ITA”)
from the refusal of the Minister of National Revenue to register it as a
charitable organization under subsection 248(1) of the ITA.
Background
[2]
The appellant
was incorporated on September 19, 2006 as a corporation without share capital
under Part II of the Canada Corporations Act, R.S.C. 1970, c. C-32. Its corporate
objects, as identified in its Letters Patent, are as follows:
a) to fund, develop and carry on
activities to research and produce in-depth news and public affairs programs
designed to provide unbiased and objective information concerning significant
issues and current events that are relevant to a large sector of the general
public and to disseminate these programs by publishing, broadcasting, cable,
satellite, Internet and any other distribution method available now or
developed in the future in order to encourage a well-informed general public
for the benefit of society;
b) to receive gifts, bequests, trusts,
funds and property and beneficially, or as a trustee or agent, to hold, invest,
develop, manage, administer and distribute funds and property for the objects
of the Corporation, for and to such other organizations as are “qualified donees”
under the provisions of the Income Tax Act and for such other purposes
and activities as are authorized for registered charities under the provisions
of the Income Tax Act; and
c) to conduct any and all activities and
exercise any and all such powers as are necessary for the achievement and
furtherance of the objects of the Corporation.
[3]
Shortly
after its incorporation, the appellant applied to the Minister in order to be
registered under the ITA as a charitable organization, taking the position that
its purposes fell within two heads of charity, namely (a) the advancement of
education and (b) other purposes beneficial to the community as a whole in a
way which the law regards as charitable.
[4]
After various
exchanges, the Minister denied this application. The Minister found that the
appellant’s purposes lacked the necessary element of structured, targeted
instruction that characterize the definition of advancing education. The
Minister was also of the view that while the courts may expand the law by
reasonable extension or analogy to the purposes judicially established to be
charitable, there were no cases supporting the position that current event news
and public affairs programming, broadcasting or publishing were charitable
purposes.
[5]
The
appellant filed a notice of objection, but the decision on this objection confirmed
the Minister’s refusal, hence this appeal.
The position of the parties
[6]
The
appellant’s main contention is that it has charitable purposes beneficial to
the community under the fourth head of the classification first set out in Commissioners
for Special Purposes of the Income Tax v. Pemsel, [1891] A.C. 531 (UKHL) (“Pemsel”),
and it largely relies on the decisions of this Court in Native
Communications Society of B.C. v. Canada (M.N.R.), [1986] 3 F.C. 471 (“Native
Communications”) and Vancouver Regional FreeNet Association v.
M.N.R., [1996] 3 F.C. 880 (“Vancouver FreeNet”) for the
proposition that endeavours similar to its own are charitable.
[7]
The
appellant’s second contention is that its purposes fall under the second head
of the Pemsel classification since they promote the advancement of
education within the meaning of the common law of charity. The appellant
submits that the production of in-depth news and public affairs programs improves
the sum of communicable knowledge in areas which education covers. Objectively
informing the public concerning significant issues and current events are said
to be purposes related to education. Again, the appellant relies on Native
Communications to support its contention on the second head.
[8]
The respondent,
on the other hand, notes that newspapers and other news publications have been
around since the invention of the printing press. The respondent adds that there
is no jurisprudential authority standing for the proposition that the mere
provision of news information is charitable, no evidence that it is included in
contemporary society’s conception of charity, and no compelling reason to so
find. To accept the appellant’s contentions would, in the respondent’s view,
considerably expand the fourth head of charity. The respondent also adds that Native
Communications is of no assistance to the appellant and must be understood
within the context of the special position occupied by aboriginals in Canadian
society; Vancouver FreeNet is equally of no assistance since it dealt
with a communications infrastructure, the Internet, and not with news and
public affairs programming and publication.
[9]
The
respondent further asserts that in order to qualify under the head related to
the advancement of education, the information or training must be provided in a
structured manner and for a genuinely educational purpose. Simply providing
the public with news and public affairs programming, whether in depth or
otherwise, does not constitute education or educational research as defined in
law for purposes of charity.
Analysis
Introduction
[10]
The ITA
describes in section 149 persons who are exempt from income tax, notably
non-profit organizations and registered charities. The ITA maintains a clear
distinction between non-profit organizations, which are operated exclusively
for social welfare, civic improvement, pleasure or recreation or for any other
purpose except profit, and charities. Consequently, not all non-profit endeavours
are entitled to be registered as charities. This distinction is important,
since it suggests the limited purposes for which a charity can be recognized
for registration purposes. As noted in Vancouver Society of Immigrant and
Visible Minority Women v. Minister of National Revenue, [1999] 1 S.C.R. 10
(“Vancouver Society”) at para. 151, it is imperative not to undermine
the distinction that the ITA makes between non-profit and charitable
organizations.
[11]
A
registered charity is in a more advantageous tax position than a non-profit
corporation since, in addition to being exempt from tax, contributors to such
charities are eligible to receive tax benefits in respect of the contributions
made. The public purse can thus be brought to contribute in order to facilitate
the financing of the activities of a registered charity insofar as the charity secures
donations from Canadian taxpayers. Consequently, the ultimate policy reason for
offering such tax benefits to charitable organizations is to encourage activities
which are of a “special benefit to the community” (Vancouver Society at
para. 170). It is this special benefit which distinguishes organizations which
are charitable from those that are simply non-profit.
[12]
The ITA
requires in subsection 149.1(1) that in order to be registered as a charity,
the charitable organization must devote all its resources to “charitable
activities carried out by the organization itself.” However, no definition of
“charitable activities” is included in the ITA, the meaning of this expression being
determined by reference to the common law.
[13]
Though the
ITA refers to “charitable activities”, in Vancouver Society at paras.
142 to 153, Iacobucci J., for the majority, noted that the common law
definition of charity developed in the context of trust law focussed on
“charitable purposes” rather than “charitable activities”, and he concluded
that it is the purpose in furtherance of which an activity is carried out, and
not the character of the activity itself, that determines whether or not it is
charitable; see also A.Y.S.A. Amateur Youth Soccer Association v. Canada (Revenue Agency), 2007 SCC 42, [2007] 3 S.C.R.
217 (“A.Y.S.A.”) at para. 24. The requirements for registration as a
charity under the ITA were thus summarized as follows in Vancouver Society
at para. 159:
[159] In conclusion, on the basis of the Canadian
jurisprudence, the requirements for registration under s. 248(1) come down to
two:
(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).
In the absence of legislative reform providing guidelines,
the best way in which to discern the charitable quality of an organization’s
purposes is to continue to proceed by way of analogy to those purposes
already found to be charitable by the common law, and conveniently classified
in Pemsel, subject always to the general requirement of providing a
benefit to the community, and with an eye to society’s current social, moral,
and economic context. The task at hand, then, is to consider whether the
Society, as presently constituted, has met these criteria.
[14]
The Charitable
Uses Act, 1601 (Eng.), 43 Eliz. 1, c. 4 listed
various activities which were categorized in Pemsel into a scheme of
four heads under which recognized charitable purposes must fall: (1) the relief
of poverty; (2) the advancement of education; (3) the advancement of religion;
and (4) certain other purposes beneficial to the community, not falling under
the preceding heads. This scheme has been adopted in Canada: Vancouver Society at para. 147; A.Y.S.A.
at para. 26.
[15]
In this
case, the appellant submits that it may be registered as a charity under the
second head of Pemsel, the advancement of education, or alternatively the
fourth head, certain other purposes beneficial to the community. However, for
the reasons that follow, I cannot accede to these submissions.
The advancement of education
[16]
Vancouver
Society is
the seminal Canadian authority on the second Pemsel head of charity. Prior
to that decision, the “advancement of education” had been given a fairly
restrictive meaning limited to formal training or the improvement of a useful
branch of human knowledge. This approach was modified and broadened in Vancouver
Society to include information or training provided in a structured manner
and for genuinely educational purposes:
[169] To limit the notion of “training
of the mind” to structured, systematic instruction or traditional academic
subjects reflects an outmoded and under inclusive understanding of education
which is of little use in modern Canadian society. As I said earlier, the
purpose of offering certain benefits to charitable organizations is to promote
activities which are seen as being of special benefit to the community, or
advancing a common good. In the case of education, the good advanced is
knowledge or training. Thus, so long as information or training is
provided in a structured manner and for a genuinely educational purpose -- that
is, to advance the knowledge or abilities of the recipients -- and not
solely to promote a particular point of view or political orientation, it
may properly be viewed as falling within the advancement of education.
[171]
That
is not to say that education should be broadened beyond recognition, however.
Even while advocating a more inclusive approach to education, the Ontario Law
Reform Commission also cautioned against treating as educational those
activities which, although they advance legitimate goods, do not include any
actual teaching or learning component. The concern is that, in certain
cases, activities which fit awkwardly with the concept of education -- such as,
for example, a trust to assist the publication of unknown authors -- seem to
have been accorded charitable status under that category nonetheless, mainly
because they did not fall within any of the other categories. I would
agree with that caution. 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. Neither is
“educating” people about a particular point of view in a manner that might more
aptly be described as persuasion or indoctrination. On the other hand,
formal or traditional classroom instruction should not be a prerequisite,
either. The point to be emphasized is that, in appropriate circumstances,
an informal workshop or seminar on a certain practical topic or skill can be
just as informative and educational as a course of classroom instruction in a
traditional academic subject. The law ought to accommodate any legitimate
form of education.
[Emphasis added]
[17]
Applying these
principles to the purposes of the appellant, I cannot conclude that they meet
the expanded notion of the advancement of education as set out in Vancouver
Society. Though
I agree that the production and dissemination of in-depth news and public
affairs programs may improve the sum of communicable knowledge about current
affairs, such activities are not sufficiently structured for educational
purposes. The appellant’s audience is merely being offered news and public affairs
content. This may provide an opportunity for that audience to improve its
knowledge of current affairs, but this offering is, at best, nothing more than
the provision of an opportunity for individuals to educate themselves through
the availability of materials with which this might be accomplished, but need
not be. In Vancouver Society such an opportunity was found not to meet
the requisite threshold for acceptance as a charitable purpose related to the
advancement of education.
[18]
The
appellant’s contentions that news production and dissemination have been recognized
in Native Communications as charitable purposes for the advancement of
education are also misplaced. I shall discuss this decision at greater length, but
here it suffices to note that the newspaper at issue in that case was more than
a mere vehicle for conveying news. Rather it was meant to foster the
development of aboriginal language and culture. As noted by Stone J. at pp.
481-82:
It is apparent that the
newspaper is used more than as a mere vehicle for conveying news. An
examination of its pages shows that through them its Indian readers are made
aware of activities of a cultural nature going on elsewhere in the wider Indian
community and of attempts being made to foster language and culture as, for
example, through greater use of native languages and the revival of ancient
crafts, music and story telling. All of this may well instill a degree of pride
of ancestry in the readers of "Kahtou", deepen an appreciation of
Indian culture and language and thereby promote a measure of cohesion among the
Indian people of British Columbia that might otherwise be missing. The record indicates that radio
and television programs are being designed along the same general lines.
Other purposes beneficial to
the community
[19]
The
appellant also contends that its purposes fall under the fourth head of charity
under Pemsel, in that they are other charitable purposes beneficial to
the community. At the hearing before this Court, the appellant noted, through
its counsel, that it is not seeking to expand the common law definition of
charity under the fourth head, its position being that current jurisprudence
already recognizes the production and dissemination of news and public affairs
programs as charitable purposes. However, whether applying current
jurisprudence, or considering the issue from the perspective of an incremental
change in the definition of charity, I cannot conclude that the appellant’s
purposes are charitable.
[20]
In
determining if an organization is charitable, under the fourth head of Pemsel,
for successful registration under the ITA, it is necessary to consider the
trend of the cases addressing whether purposes are for a public benefit which
the law regards as charitable: A.Y.S.A. at para. 31. I shall therefore
review the most pertinent cases referred to by the parties in this matter, in
chronological order: Native Communications; N. D. G. Neighbourhood
Association v. Minister of National Revenue (1988), 85 N.R. 73, 88 D.T.C.
6279 (F.C.A.) (“N.D.G. Neighbourhood”);
Vancouver FreeNet; Vancouver Society; and Aid/Watch
Incorporated v. Commissioner of Taxation, [2010] HCA 42 (Aust. H.C.) (“Aid/Watch”).
[21]
Native
Communications
concerned an organization which had as its principal purposes (i) the
organization and development of comprehensive non-profit communications
programs, namely radio and television productions that are of relevance to the
native people of British Columbia; (ii) to train native people as communications
workers; (iii) to publish a non-profit newspaper on subjects relevant to the
native people of British Columbia; and (iv) to procure and deliver information
on subjects facing native people of British Columbia. Taking into account the
special legal position in Canadian society occupied by aboriginal peoples,
their recognized special needs, and the fiduciary relationship binding the
state and aboriginals, Stone J. A. concluded that these purposes were
beneficial to the aboriginal community of British Columbia and fell within the
spirit and intent of the Charitable Uses Act, 1601 as good charitable
purposes, emphasizing their relevance to aboriginal peoples: Native
Communications at pp. 481 to 484.
[22]
This
decision must of course be understood within the context of the special
position occupied in Canada by aboriginal peoples, which
has often been reiterated by the Supreme Court of Canada. However, Native
Communications also recognizes that a charitable purpose may be more readily
found to exist where the recipients of the activities sustaining this purpose
comprise individuals from groups or communities commonly recognized as in need
of special charitable assistance.
[23]
In N.D.G.
Neighbourhood, the concerned organization’s purposes included (i) to
provide a forum for group education of interested community members and help
animate people in dealing with social issues that affect them and the
community; (ii) through community media and door to door contact, to expand the
accessibility to community resources to individuals otherwise lacking the necessary
information about community activities, services and issues; (iii) to develop,
encourage and maintain programs of adult education, free of charge to the
public in the member community; (iv) to direct services to any individual who
is disadvantaged.
[24]
In that
case, MacGuigan J. A. did not recognize these purposes as charitable under the
fourth head of Pemsel on the basis that the scope of the activities
sustaining them was “universalist, within the geographical area of Notre Dame
de Grâce”; the concerned organization maintained an ambivalence “between being
a general neighbourhood association with a universal orientation and one
dedicated to the cause of the urban poor” (N.D.G. Neighbourhood at p.
77). Though the thrust of the decision to deny charitable status was founded on
the political activities of the organization, it nevertheless again emphasized the
idea stated in Native Communications that a charitable purpose may more
easily be found where the recipients of the activities sustaining that purpose
are individuals from groups or communities in need of charitable assistance.
[25]
In Vancouver
FreeNet the issue was whether the provision of free access to the
“information highway” was a charitable activity for the purposes of
registration under the ITA. The organization’s main purposes in that case
included (i) to develop, operate and own a free, publicly accessible community
computer utility in the Lower Mainland of British Columbia (“FreeNet”) providing
the broadest possible range of information and possibilities of experience,
ideas and wisdom; (ii) to encourage the development of a wide range of
community electronic information resources; (iii) to encourage the broadest
possible participation of information providers in making their information
available on FreeNet; (iv) to work towards the widest possible public access to
government and other information through FreeNet; and (v) to educate and
encourage the public in the use of computer telecommunications and information
retrieval.
[26]
Though the
purposes of the organization contemplated in Vancouver FreeNet were
clearly not limited to activities addressing individuals from groups or
communities in need of charitable assistance, Hugessen J. A. and Pratte J. A.
(Décary J. A. dissenting) nevertheless recognized these purposes as charitable
on the basis that the “information highway” was an essential public service
similar to repairs to bridges, ports, causeways and highways which have
historically been regarded as charitable and which were referred to in the Charitable
Uses Act, 1601.
[27]
The
repairs to bridges, ports, causeways and highways are beneficial to the
community as a whole and are therefore not targeted to a specific group or
community in need of assistance. Nevertheless, these types of public infrastructures
have been considered charitable, as have other similar public infrastructure
works such as libraries and aqueducts. As noted by Lord MacNaughten in Pemsel,
“[e]ven a layman might take the same favourable view of a gratuitous supply of
pure water for the benefit of a crowded neighbourhood.” In a modern context,
the “information highway” was thus assimilated to such public infrastructure
works. However, in order to qualify as a charitable purpose in such
circumstances, a public infrastructure must be contemplated. Thus, in Vancouver
FreeNet the majority, paraphrasing the philosopher and scholar Marshall
McLuhan, was careful to distinguish “between the medium and the message” (Vancouver
FreeNet at para. 18), noting that the concerned organization was providing
access to messages but not the messages themselves.
[28]
Aid/Watch is a recent decision from the
High Court of Australia on which the appellant relies in order to advance the
argument that the generation of public debate has been recognized as a charitable
purpose. The organization contemplated by that decision was promoting the
effectiveness of Australian and multinational aid provided in foreign countries.
In the course of its activities, the organization was attempting to persuade
government of its point of view through criticism and by seeking change in
government activities and policies. As a result, the charitable status of the
organization had been denied because its immediate and prevailing aim was to
influence government. A majority of the High Court overruled the denial of
charitable status, finding instead that purposes directed to the “generation by
lawful means of public debate, in the sense described earlier in these reasons,
concerning the efficiency of foreign aid directed to the relief of poverty,
itself is a purpose beneficial to the community within the fourth head of Pemsel”
(Aid/Watch at para. 47). The majority of that Court added that in Australia there is no general doctrine
which excludes from charitable purposes “political objects” (Aid/Watch
at para. 48).
[29]
The High
Court of Australia recognized that the law was substantially different in
Canada (Aid/Watch at para. 26) since the ITA sets out express limits in
subsections 149.1(6.1) and (6.2) regarding the conduct of political activities
by a charity, which are permitted in Canada only if they are ancillary and
incidental to its charitable purposes and do not include support or opposition
to any political party or candidate. Moreover, even if the principles
enunciated by the majority in Aid/Watch were applicable in Canada, they
would be of little assistance to the appellant since under these principles,
the public debate carried out by a charity must itself be targeted to a
charitable purpose, in that case the relief of poverty in the developing world.
The appellant’s purposes in this case are directed to the production and
dissemination of in-depth news and public affairs programs to the general
public, without any emphasis or focus on public debate concerning a genuinely
charitable issue.
[30]
To conclude, in order to be charitable, the appellant’s
purposes must be of special benefit to the community, with an eye to society’s
current social, moral, and economic context. The appellant’s purposes do not
meet this requirement. Though I agree that the production and dissemination
of in-depth news and public affairs programs may improve awareness of current
affairs, I do not consider these purposes alone to be in the nature of the
“special” benefit required of a charitable organization.
[31]
The appellant
identifies its audience as the general public; its purposes are therefore not
targeted to any group or community in need of charitable assistance. The
appellant’s purposes are equally applicable to many news and public affairs
publications and broadcasting endeavours in Canada, including those carried out on a
commercial basis. The appellant’s contention that its news and public affairs
programs shall be “designed to provide unbiased and objective information”
could conceivably constitute the avowed mission statement of most major
publishers and broadcasters in Canada.
[32]
The
appellant does not purport to provide a public infrastructure of benefit to the
community at large since its purposes are principally concerned with disseminating
information concerning significant issues and current events. In other words,
the appellant’s purposes are focussed on the message rather than the medium.
There is no analogy to be drawn between these purposes and the types of public
infrastructures which have been considered charitable at common law.
[33]
Simply put,
there is little which can be found to be “charitable” in the appellant’s purposes.
I would consequently dismiss this appeal, with costs in favour of the
respondent.
"Robert
M. Mainville"
“I
agree
M. Nadon J.A.”
“I
agree
Carolyn Layden-Stevenson J.A.”
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