SUPREME
COURT OF CANADA
Citation: A.Y.S.A.
Amateur Youth Soccer Association
v. Canada
(Revenue Agency), [2007] 3 S.C.R. 217, 2007
SCC 42
|
Date: 20071005
Docket: 31476
|
Between:
A.Y.S.A.
Amateur Youth Soccer Association
Appellant
and
Canada Revenue
Agency
Respondent
‑ and ‑
Canadian
Centre for Philanthropy
Intervener
Coram:
McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron
and Rothstein JJ.
Reasons for
Judgment:
(paras. 1 to 45)
Concurring
Reasons:
(paras. 46 to 59)
|
Rothstein J. (McLachlin C.J. and Bastarache, Binnie,
LeBel, Deschamps, Fish and Charron JJ. concurring)
Abella J.
|
______________________________
A.Y.S.A. Amateur
Youth Soccer Association v. Canada (Revenue Agency), [2007] 3 S.C.R.
217, 2007 SCC 42
A.Y.S.A. Amateur Youth Soccer Association Appellant
v.
Canada Revenue Agency Respondent
and
Canadian Centre for Philanthropy Intervener
Indexed as: A.Y.S.A.
Amateur Youth Soccer Association
v. Canada (Revenue Agency)
Neutral citation: 2007 SCC 42.
File No.: 31476.
2007: May 16; 2007: October 5.
Present: McLachlin C.J. and Bastarache, Binnie, LeBel,
Deschamps, Fish, Abella, Charron and Rothstein JJ.
on appeal from the federal court of appeal
Taxation — Income tax — Charities — Registered
charity — Amateur youth soccer association operating exclusively at provincial
level seeking registration as charity — Whether registered Canadian amateur
athletic association provisions of Income Tax Act preclude amateur sports
association from charitable status — Whether amateur youth soccer association
a charity for purposes of Income Tax Act — Income Tax Act, R.S.C. 1985,
c. 1 (5th Supp .), ss. 149.1(1) “charitable organization”, 248(1)
“registered Canadian amateur athletic association”.
A.Y.S.A., an amateur soccer association which operates
exclusively at the provincial level, applied to the Canada Revenue Agency to
become a “registered charity” under s. 248(1) of the Income Tax Act
(“ITA ”). The Agency refused to register A.Y.S.A. as a charity finding
that the courts had not held the promotion of sports to be a charitable
purpose. The Federal Court of Appeal affirmed the decision, finding that the
registered Canadian amateur athletic association (“RCAAA”) provisions in
s. 248(1) of the ITA provide charity-like treatment for amateur
athletic associations only with respect to those which operate on a nationwide
basis.
Held: The appeal should
be dismissed.
Per McLachlin C.J. and
Bastarache, Binnie, LeBel, Deschamps, Fish, Charron and Rothstein JJ.: The
fact that the A.Y.S.A. and other sport associations do not qualify as a RCAAA
does not automatically preclude them from being found to be a charity. While
the wording of the definition of RCAAA in s. 248(1) clearly indicates that
Parliament intended the benefit of RCAAA status to be available only to
nationwide associations, the RCAAA regime is not a complete code for amateur
sporting activities and its provisions are not to be read as an exhaustive
statement on the charitable status of all sports organizations in all
circumstances. Neither the text nor scheme of the ITA , nor the
legislative purpose in establishing the RCAAA regime suggest that the RCAAA
provisions preclude charitable status for non‑nationwide sports
organizations of all sorts or all descriptions. Rather, Parliament created a
clear position for RCAAAs and left the rest to be determined in accordance with
the long‑standing practice under the common law. [12] [17-18] [23]
In order to be registered as a charity under
s. 149.1(1) of the ITA , an organization must devote all of its
resources to “charitable activities carried on by the organization itself”.
The definition of “charitable organization” in s. 149.1(1) focusses on
“charitable activities”, but it is really the purpose in furtherance of which
an activity is carried out, not the character of the activity itself, that determines
whether or not it is “charitable”. As the ITA does not define
“charitable activities”, Canadian courts have consistently applied the Pemsel
approach to determine that question. Here, the A.Y.S.A. does not qualify for
registration as a charity because its purposes and activities are not
charitable. Under the fourth head of the Pemsel approach — the only
head applicable in this case —, the purposes of the organization must be (a) of
“public benefit” or “beneficial to the community” and (b) “in a way which the
law regards as charitable”. Public benefit alone does not equal charity, and
while it is accepted that participating in sport is generally beneficial, those
benefits alone are not enough to qualify an organization as charitable. The
case law supports the proposition that sport, if ancillary to another
recognized charitable purpose, such as education, can be charitable, but not
sport in itself. The Letters Patent of the A.Y.S.A. refer to promoting soccer
and increasing participation in the sport of soccer. The fact that an activity
or purpose happens to have a beneficial by‑product is not enough to make
it charitable. If every organization that might have beneficial by‑products,
regardless of its purposes, were found to be charitable, the definition of
charity would be much broader than what has heretofore been recognized in the
common law. The organization must have as its main objective a purpose and
activities that the common law will recognize as charitable. The A.Y.S.A. was
unable to establish this to be the case. Furthermore, the scheme of the ITA
does not support a wide expansion of the definition of charity, and it is
imperative to preserve the distinction that the ITA makes between
charitable and non‑profit organizations. Lastly, the potential
recognition of non‑profit sport and recreation organizations as charities
is closer to a wholesale reform than incremental change and while it may be
desirable as a matter of policy to give sports associations the tax advantage
of charitable status, it is a task better suited to Parliament than the courts.
[24] [27] [37] [40-45]
Per Abella J.: Resort to
the common law test for determining what is a charity is unnecessary in this
case because the RCAAA provisions of the ITA prevent A.Y.S.A. from being
treated as a charity under the ITA . The legislative history of the
RCAAA provisions confirms that Parliament specifically put its mind to drawing
a distinction between amateur athletic associations operating on a national
level and those that operate on a regional or provincial one, and decided to
confer charity-like tax benefits only on national amateur athletic
associations. This reflects a clear policy choice and Parliament’s intention
to exclude all other amateur athletic associations could hardly be clearer.
Since A.Y.S.A. operates exclusively at the provincial level, the statute has
denied it access to charitable status, a denial the common law is powerless to
overcome. [47] [51-52] [54] [56] [58]
Cases Cited
By Rothstein J.
Distinguished: Re
Laidlaw Foundation (1984), 13 D.L.R. (4th) 491; referred
to: Vancouver Society of Immigrant and Visible Minority Women v. M.N.R.,
[1999] 1 S.C.R. 10; R. v. Salituro, [1991] 3 S.C.R. 654; Maccabi
Canada v. M.N.R., 98 D.T.C. 6526; Placer Dome Canada Ltd. v. Ontario
(Minister of Finance), [2006] 1 S.C.R. 715, 2006 SCC 20; Canada Trustco
Mortgage Co. v. Canada, [2005] 2 S.C.R. 601, 2005 SCC 54; Shell Canada
Ltd. v. Canada, [1999] 3 S.C.R. 622; Commissioners for Special Purposes
of the Income Tax v. Pemsel, [1891] A.C. 531; The King v. Assessors of
the Town of Sunny Brae, [1952] 2 S.C.R. 76; Guaranty Trust Co. of Canada
v. Minister of National Revenue, [1967] S.C.R. 133; D’Aguiar v. Guyana
Commissioner of Inland Revenue, [1970] T.R. 31; Re Nottage, [1895] 2
Ch. 649; In re Mariette, [1915] 2 Ch. 284; Inland Revenue
Commissioners v. McMullen, [1981] A.C. 1; Inland Revenue Commissioners
v. City of Glasgow Police Athletic Association, [1953] 1 All E.R. 747; Laing
v. Commissioner of Stamp Duties, [1948] N.Z.L.R. 154.
By Abella J.
Referred to: Commissioners
for Special Purposes of the Income Tax v. Pemsel, [1891] A.C. 531; Vancouver
Society of Immigrant and Visible Minority Women v. M.N.R., [1999] 1 S.C.R.
10; Maccabi Canada v. M.N.R., 98 D.T.C. 6526.
Statutes and Regulations Cited
Canada Corporations Act, R.S.C. 1970, c. C‑32 , Part II.
Charitable Uses Act, 1601 (Eng.), 43 Eliz. 1, c. 4 (Statute of Elizabeth or
Statute of Charitable Uses), preamble.
Charities Act 2006
(U.K.), 2006, c. 50, s. 2(2)(g).
Income Tax Act, R.S.C.
1985, c. 1 (5th Supp .), ss. 110.1(1) , 118.1(1) , (3) , 149(1) (f),
(l), 149.1(1) , 172(3) , 180(1) , 248(1) .
Interpretation Act, R.S.C. 1985, c. I‑21, s. 8.1 .
Authors
Cited
Canada. Revenue Agency. Policy Statement:
“Registration of Canadian Amateur Athletic Associations”. Reference Number CPS‑011,
effective October 28, 1996.
Canada. House of Commons. House of Commons
Debates, vol. VI, 2nd Sess., 28th Parl., April 23, 1970, p. 6235.
Canada. House of Commons. House of Commons
Debates, vol. VII, 1st Sess., 28th Parl., April 2, 1969,
p. 7423.
Canada. House of Commons. House of Commons
Debates, vol. VII, 3rd Sess., 28th Parl., June 18, 1971, p. 6895.
Canada. House of Commons. House of Commons
Debates, vol. IX, 3rd Sess., 28th Parl., October 25, 1971, p.
9009.
Driedger, Elmer A. Construction of Statutes,
2nd ed. Toronto: Butterworths, 1983.
Picarda, Hubert. The Law and Practice Relating to
Charities, 3rd ed. London: Butterworths, 1999.
Sullivan, Ruth. Sullivan and Driedger on the
Construction of Statutes, 4th ed. Markham, Ont.: Butterworths, 2002.
Tudor on Charities,
9th ed. by Jean Warburton. London:
Sweet & Maxwell, 2003.
Waters, Donovan W. M.,
Mark R. Gillen and Lionel D. Smith, eds. Waters’ Law of Trusts in
Canada, 3rd ed. Toronto: Thomson Carswell, 2005.
APPEAL from a judgment of the Federal Court of Appeal
(Létourneau, Noël and Evans JJ.A.) (2006), 267 D.L.R. (4th) 724, 348 N.R. 295,
[2006] 3 C.T.C. 294, 2006 D.T.C. 6314, [2006] F.C.J. No. 542 (QL), 2006 FCA
136, affirming a decision of the Minister of National Revenue denying the
appellant’s application to be registered as a charity under the Income Tax
Act . Appeal dismissed.
D. Geoffrey Cowper,
Q.C., E. Blake Bromley and W. Stanley Martin, for
the appellant.
Wendy Burnham and David
Jacyk, for the respondent.
W. Laird Hunter, Q.C.,
David Stevens, Susan M. Manwaring and
Kate Lazier, for the intervener.
The judgment of McLachlin C.J. and Bastarache, Binnie,
LeBel, Deschamps, Fish, Charron and Rothstein JJ. was delivered by
Rothstein J. —
I. Introduction
1
This case concerns whether the A.Y.S.A. Amateur Youth Soccer Association
is a charity for purposes of the Income Tax Act, R.S.C. 1985, c. 1 (5th
Supp .) (“ITA ”), allowing it to issue tax receipts enabling its donors to
obtain income tax deductions or credits. I find that it is not.
II. Factual Background
2
A.Y.S.A. is a corporation without share capital incorporated under Part
II of the Canada Corporations Act, R.S.C. 1970, c. C-32 . The Letters
Patent of A.Y.S.A. set out its objects as follows:
a) to fund and develop activities and programs to promote,
organize and carry on the sport of amateur youth soccer;
b) to fund, promote and develop local amateur youth soccer
programs and coaching appropriate to different age groups and different levels
of ability to increase participation in the sport of soccer;
c) to raise funds for facilities and equipment necessary to
achieve the foregoing objects in ways the law regards as charitable;
d) to receive gifts, bequests, funds and property and to hold,
invest, manage, administer and distribute funds and property for the objects of
the Corporation; and
e) to conduct activities and exercise such powers
as are necessary for the achievement and furtherance of the objects of the
Corporation.
As stipulated at
Part IV of the Letters Patent, the operations of A.Y.S.A. may be carried out
exclusively in the province of Ontario.
3
In February 2005, A.Y.S.A. applied to the Canada Revenue Agency (“CRA”)
to become a “registered charity” under s. 248(1) of the ITA . In its
application, A.Y.S.A. described the activities through which it intended to
achieve the objects in its Letters Patent as follows:
The Association intends to administer and perform all the functions
necessary to support local youth soccer in local communities in Ontario.
Amateur soccer is defined for the Association’s purposes as soccer that is
played for the purpose of deriving the physical, mental and social benefits
that organized sport has to offer other than present or future commercial gain.
. . .
. . . The
Applicant’s main objective is to offer youths in the community the opportunity
to develop and hone soccer skills through practice and competition so they can
develop pride in their abilities and soccer skills.
We will also encourage and promote good sportsmanship and fair play.
Encouraging youth in the community to pursue physical activities in a team
environment will enable each individual to develop a healthy attitude toward
fitness and teamwork. Extra-curricular activities that are structured around
the pursuit of physical fitness and belonging to a team require a significant
commitment of time and attention. This personal commitment will undoubtedly
result in healthy and socially beneficial attitudes and improved time
management skills. It will also have the result of less time to ‘hang out’
around the corner store. The players, hopefully, will not have the time or
interest to spend time in undesirable places with people of questionable
character where they are more readily exposed to illegal activities including
drugs, vandalism and anti-social behaviour such as bullying.
The Association will be managed and operated by
volunteers.
III. Decisions Below
A. Canada Revenue Agency
4
In its letter to A.Y.S.A. of June 8, 2005, the CRA refused to register
A.Y.S.A. as a charity. It stated that
the courts have not held the promotion of sport to be a charitable
purpose. . . . As the Association’s formal objects state that its overall
purpose is to promote the sport of soccer, it does not qualify for registration
as a charity.
B. Federal Court of Appeal (Noël J.A., Létourneau and Evans
JJ.A. concurring) (2006), 267 D.L.R. (4th) 724, 2006 FCA 136
5
The Federal Court of Appeal dismissed A.Y.S.A.’s appeal of the CRA
decision, brought pursuant to ss. 172(3) and 180(1) of the ITA . The
court found that the registered Canadian amateur athletic association (“RCAAA”)
provisions of the ITA precluded the possibility of an amateur sport
association being treated as a charity under the ITA . Through the RCAAA
provisions, Parliament opted to provide charity-like treatment for amateur
athletic associations, but only with respect to those which (unlike A.Y.S.A.)
operate on a nationwide basis. The court did not find it necessary to address
the question of whether A.Y.S.A. was a charity at common law. According to the
court, Parliament must be taken to have occupied the field respecting the tax
treatment of amateur sports associations regardless of their status in the law
of charity. To hold otherwise, it held (at para. 22), “would frustrate
Parliament’s clearly expressed intent to limit the federal funding of amateur
sports associations to those which operate nationally”.
IV. Analysis
A. Do the RCAAA Provisions of the ITA
Preclude Amateur Sports Associations from Charitable Status?
6
An RCAAA, as defined by s. 248(1) of the ITA , is a non-profit
organization which has as its “primary purpose and its primary function, the
promotion of amateur athletics in Canada on a nation‑wide basis”.
Sections 110.1(1) (a)(ii), 118.1(1) (b) and s. 118.1(3) , along with
s. 149(1) (l) of the ITA , afford RCAAAs two benefits that are also
given to charities under the ITA : (1) they pay no tax on their income;
and (2) they can issue tax receipts enabling their donors to obtain tax
deductions (for corporations) or non-refundable tax credits (for individuals)
for their donations. By contrast, other associations which qualify as
non-profit organizations under the ITA , but not as registered
charities or RCAAAs, receive the first benefit but not the second: they pay no
tax on their income, but they cannot issue tax receipts to donors.
7
As RCAAAs must operate nationwide, an organization such as A.Y.S.A.,
which operates only in Ontario, cannot register as an RCAAA. Nonetheless,
A.Y.S.A. claims to be eligible for registration as a charity under s. 248(1) of
the ITA .
8
To qualify as a “charitable organization” under the ITA , an
organization must meet the criteria listed in s. 149.1(l)(a) to (d),
one of which is that the organization must devote all of its resources to
“charitable activities”. The ITA does not define “charitable
activities”. Rather, it implicitly relies upon the common law definition of
charity (Vancouver Society of Immigrant and Visible Minority Women v. M.N.R.,
[1999] 1 S.C.R. 10, at paras. 143 and 150), which is subject to incremental
change as the common law adapts to societal change (Vancouver Society,
at para. 150, citing R. v. Salituro, [1991] 3 S.C.R. 654, at p. 670).
Unless legislation provides otherwise, it will be for the courts, through the
jurisprudence, to determine what is or is not a charity for legal purposes.
9
The government argues that the ITA has provided otherwise,
and that for sports, the statute has supplanted whatever the common law says
about sports as charity. Specifically, it argues that the RCAAA provisions of
the ITA occupy the field for amateur sports associations so that any
sports associations that fail to qualify as RCAAAs cannot qualify as registered
charities either. I cannot agree and I will explain why in dealing with the
arguments advanced by the government.
(a) Parliamentary Intent
10
The intervener, the Canadian Centre for Philanthropy, argues that the
groundwork for the RCAAA regime was a federal government task force set up in
response to Canada’s poor showing in the 1968 Olympic Games in Mexico City and
the announcement that Montreal would host the 1976 Olympic Games. The CRA
Policy Statement No. CPS-011 on “Registration of Canadian Amateur Athletic
Associations”, effective October 28, 1996, suggests that, at least from the
CRA’s viewpoint, the RCAAA regime is geared to the training of “elite” or
“high-performance” athletes, defined as “athletes whose performance is
currently ranked in the top 16 in the world or have the potential to compete at
that level”. Both the intervener’s argument and the Policy Statement suggest
that the RCAAA provisions were focussed on a specific objective involving
high-performance athletes and do not support the government’s argument that
these provisions constitute a complete code for the income tax treatment of all
sports associations.
11
The government cites various passages from Hansard to argue that
in 1971, when Parliament amended the ITA creating the RCAAA provisions,
it intended to exclude sports associations other than RCAAAs from the tax
benefits of charitable status (House of Commons Debates, vol. VI, 2nd
Sess., 28th Parl., April 23, 1970, at p. 6235; vol. VII, 3rd Sess., 28th
Parl., June 18, 1971, at p. 6895; vol. IX, 3rd Sess., 28th Parl., October 25,
1971, at p. 9009). When faced with the issue of whether to provide tax relief
for sport under the ITA , according to the government, Parliament chose
to extend charity-like benefits to only a small number of sports associations
and did so, not by expanding the definition of charity, but through the
alternative mechanism of the RCAAA. Therefore, the government argues, any
interpretation of the charitable provisions of the ITA must be
circumscribed by Parliament’s express intention not to include the promotion of
sport as charitable and not to extend the tax benefits given to national amateur
sports associations to those at the regional or local level. The government
also argues that although RCAAAs must operate nationwide, the RCAAA scheme
still benefits regional and local associations because RCAAAs are permitted to
channel funds down through their member organizations to the provincial,
regional and local levels.
12
It is clear from the wording of the definition of RCAAA in s. 248(1) ,
that Parliament intended the benefit of RCAAA status to be available only
to nationwide associations. However, I have difficulty accepting the
government’s “occupied field” argument based on excerpts from Hansard.
While Hansard may offer relevant evidence in some cases, comments of MPs
or even Ministers may or may not reflect the parliamentary intention to be
deduced from the words used in the legislation. “It is clear that no single
participant in the legislative process can purport to speak for the legislature
as a whole” (R. Sullivan, Sullivan and Driedger on the Construction of
Statutes (4th ed. 2002), at p. 489).
13
In any event, there is nothing in the passages cited by the government
to indicate that the creation of the RCAAA regime precluded the registration of
other sports associations as charities. Parliament can be taken to have put
its mind to the question of which athletic associations would qualify as RCAAAs
and to have chosen nationwide organizations only. It may also be that
Parliament was operating under the assumption that athletic associations were
not considered charitable at common law, which explains the special provisions
ensuring charity-like status for RCAAAs (House of Commons Debates, vol.
VII, 1st Sess., 28th Parl., April 2, 1969, at p. 7423). However, neither of
these propositions evince a parliamentary intent to freeze the development of
the common law on charitable status or to occupy the field for all amateur
sports. Neither does the fact that RCAAAs can channel funds to their regional
member organizations necessarily support the view that any other non-affiliated
sports organizations were intended to be absolutely excluded from charitable
status. The ITA continued to leave the definition of what is
“charitable” to be determined by reference to the common law.
14
The government also cites Maccabi Canada v. M.N.R., 98 D.T.C.
6526, where the Federal Court of Appeal suggested that the “nation-wide basis”
requirement for RCAAAs was “consistent with the legislative intent to ensure
that the issuing of receipts to donators would come from a single organization
at the national level and that Revenue Canada would not have to interface with
a myriad of provincial, regional and local organizations” (p. 6528). However,
the Federal Court of Appeal offered no evidence for this legislative intent,
and as that case involved a different question, namely whether “nation-wide
basis” included a demographic as well as geographic requirement, I do not find
it to be instructive to the case at bar.
15
The words used by Parliament in the ITA provisions concerning
RCAAAs show no express intention that the RCAAA regime occupies the field for
sports associations; that is, there are no words in the ITA which state
that the only way for sports organizations to achieve the same tax treatment as
charities is to qualify as an RCAAA. Therefore, to find an occupied field, it
would be necessary to interpret the express creation of RCAAA status for
nationwide amateur athletic associations as implying the exclusion of all other
sports organizations from charitable status. However, arguments based on
implied meaning must be viewed with caution. As Professor Sullivan notes:
While reliance on implied exclusion for this purpose [determining if a
provision is exhaustive] can be helpful, it can also be misleading. What the
courts are looking for is evidence that a particular provision is meant to be
an exhaustive statement of the law concerning a matter. To show that the
provision expressly or specifically addresses the matter is not enough.
[Footnote deleted; p. 266.]
16
It is well known that the modern approach to interpretation applies to
taxation statutes no less than it does to other statutes, that is, “the words
of an Act are to be read in their entire context and in their grammatical and
ordinary sense harmoniously with the scheme of the Act, the object of the Act,
and the intention of Parliament” (Placer Dome Canada Ltd. v. Ontario
(Minister of Finance), [2006] 1 S.C.R. 715, 2006 SCC 20, at para. 21;
E. A. Driedger, Construction of Statutes (2nd ed. 1983), at p. 87).
However, because of the degree of precision and detailed characteristics of
many tax provisions, an emphasis has often been placed on textual
interpretation where taxation statutes are concerned: Canada Trustco
Mortgage Co. v. Canada, [2005] 2 S.C.R. 601, 2005 SCC 54, at para. 11; Placer
Dome, at para. 23. As McLachlin J. (as she then was) stated for the Court
in Shell Canada Ltd. v. Canada, [1999] 3 S.C.R. 622, at para. 43:
The [ITA ] is a complex statute through which Parliament seeks to
balance a myriad of principles. This Court has consistently held that courts
must therefore be cautious before finding within the clear provisions of the
Act an unexpressed legislative intention: Canderel Ltd. v. Canada,
[1998] 1 S.C.R. 147, at para. 41, per Iacobucci J.; Royal Bank of
Canada v. Sparrow Electric Corp., [1997] 1 S.C.R. 411, at para. 112, per
Iacobucci J.; Antosko, supra, at p. 328, per
Iacobucci J. Finding unexpressed legislative intentions under the guise of
purposive interpretation runs the risk of upsetting the balance Parliament has
attempted to strike in the Act.
17
Similar caution is necessary when assessing claims that imply
unexpressed meanings into the RCAAA provisions, i.e. that the RCAAA provisions
also preclude charitable status for non-nationwide sports organizations of all
descriptions. The precise and unequivocal meaning of the RCAAA provisions is
to grant certain charity-like tax advantages to nationwide amateur athletic
associations. I do not read the RCAAA provisions to be an exhaustive statement
on the charitable status of all sports organizations in all circumstances.
18
Neither the text nor scheme of the Act, nor the legislative purpose in
establishing the RCAAA regime suggest that the RCAAA provisions preclude
charitable status for non-nationwide sports organizations of all sorts or all
descriptions. Rather, Parliament created a clear position for RCAAAs, and left
the rest to be determined in accordance with the long-standing practice under
the common law.
(b) Redundancy and Incongruity
19
Looking at the scheme of the ITA , the government also argues that
if the promotion of sport qualified as a charitable purpose, the RCAAA
provisions would be rendered both redundant and incongruous. They would be
redundant because RCAAAs would be charities so there would be no need for
separate RCAAA registration outside of the charity regime.
20
The redundancy argument is based upon the proposition that the common
law would recognize a broad, all encompassing definition of amateur sports as
qualifying for charitable status. The difficulty with this argument is that it
is based on a hypothetical assumption of what the common law might recognize.
If one hypothesizes that the common law recognition of sports activities was more
limited, there is no assurance that RCAAAs would be included. For this reason,
I do not find the redundancy argument to be helpful.
21
The government further argues that a finding that the promotion of sport
qualifies as charitable at common law would be incongruous with the RCAAA
provisions. This is because an association must be a non-profit organization
to qualify as an RCAAA (s. 248(1)) and non-profit organizations cannot, “in the
opinion of the Minister”, be charities (s. 149(1) (l)). Thus, if RCAAAs
qualified as charities, they could not qualify as non-profit organizations and
hence would be rendered ineligible as RCAAAs. This argument suffers from the
same impediment as the redundancy argument. It is based on an assumption about
the scope of the amateur sporting activity that the common law would recognize
as qualifying for charitable status. Again, I do not find that this argument
advances the analysis.
22
Thus, while it is appropriate to look at the overall scheme of the ITA ,
I do not accept the respondent’s arguments on redundancy and incongruity.
23
I therefore conclude that the RCAAA regime of the ITA is not a
complete code for amateur sporting activities. It is a provision targeted at a
narrowly defined class of associations. There is no express indication of an
intent to modify the meaning of charity or charitable activities under the ITA .
Nor is such an intent necessarily implied. The fact that a sports association
does not qualify as an RCAAA, does not automatically preclude it from being
found to be a charity.
B. The Determination of Whether an
Organization Is “Charitable” for Purposes of the ITA
24
In order to be registered as a charity for income tax purposes, an
organization must devote all its resources to “charitable activities carried on
by the organization itself” (s. 149.1(1) ). As the ITA does not define
“charitable activities”, its meaning is determined by reference to the common
law. This Court considered the definition of charity under the ITA and
at common law in Vancouver Society. Iacobucci J., for the majority,
noted that the common law definition of charity developed in the context of
trust law which focusses on “charitable purposes” rather than “charitable
activities” (para. 144). However, he found, at para. 152, that it is really
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”:
Another [problem with the standard in s. 149.1(1) ] is its focus on
“charitable activities” rather than purposes. The difficulty is that the
character of an activity is at best ambiguous; for example, writing a letter to
solicit donations for a dance school might well be considered charitable, but
the very same activity might lose its charitable character if the donations
were to go to a group disseminating hate literature. In other words, it is
really 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 of a
charitable nature. Accordingly, this Court held in Guaranty Trust, supra,
that the inquiry must focus not only on the activities of an organization but
also on its purposes.
25
The cases on charity often start by citing the preamble to the Charitable
Uses Act, 1601 (Eng.), 43 Eliz. 1, c. 4 (commonly referred to as the Statute
of Elizabeth or the Statute of Charitable Uses) which listed various
activities deemed to be charitable. A modern English rendition is as follows:
. . . relief
of aged, impotent, and poor people; the maintenance of sick and maimed soldiers
and mariners, schools of learning, free schools, and scholars in universities;
the repair of bridges, ports, havens, causeways, churches, sea banks and
highways; the education and preferment of orphans; the relief, stock, or
maintenance of houses of correction; marriages of poor maids; supportation,
aid, and help of young tradesmen, handicraftsmen, and persons decayed; the
relief or redemption of prisoners or captives; and the aid or ease of any poor
inhabitants concerning payments of fifteens, setting out of soldiers, and other
taxes.
(Vancouver Society, at para. 31)
Although neither
exhaustive nor binding, this provides a list of examples of charitable purposes
that courts might recognize.
26
The Statute of Elizabeth’s list was refined into a categorical
approach in Commissioners for Special Purposes of the Income Tax v. Pemsel,
[1891] A.C. 531 (H.L.). Pemsel (at p. 583) set up a scheme of four
classified 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 any of the preceding heads. The Pemsel approach has been
adopted by this Court (The King v. Assessors of the Town of Sunny Brae,
[1952] 2 S.C.R. 76; Guaranty Trust Co. of Canada v. Minister of National
Revenue, [1967] S.C.R. 133; Vancouver Society, at para. 147).
27
As A.Y.S.A. does not claim to fall under any of the first three Pemsel
heads, it is the fourth head that is relevant to the case at bar. In Vancouver
Society, the majority held that under the fourth head, the purposes of the
organization must be of (a) “public benefit” or “beneficial to the community”
and (b) “in a way the law regards as charitable” (para. 176). Recognizing that
this reasoning was circular and that the law was not clear, Iacobucci J., at
para. 177, adopted the following test from D’Aguiar v. Guyana Commissioner
of Inland Revenue, [1970] T.R. 31, 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.
Iacobucci J.
then added to the test:
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.
28
Iacobucci J. discussed two further points that are also of relevance to
the present appeal. First, he noted that applying the Pemsel approach
often proves a daunting task and it is difficult to articulate how the law of
charities is to keep moving in a manner consistent with the common law. He
emphasized, however, at para. 150, that there are limits to the law reform that
may be undertaken by the courts, citing Salituro, at p. 670:
Judges can and should adapt the common law to reflect the changing
social, moral and economic fabric of the country. Judges should not be quick to
perpetuate rules whose social foundation has long since disappeared.
Nonetheless, there are significant constraints on the power of the judiciary to
change the law. As McLachlin J. indicated in Watkins, supra, in a
constitutional democracy such as ours it is the legislature and not the
courts which has the major responsibility for law reform; and for any changes
to the law which may have complex ramifications, however necessary or desirable
such changes may be, they should be left to the legislature. The judiciary
should confine itself to those incremental changes which are necessary to
keep the common law in step with the dynamic and evolving fabric of our
society. [Emphasis added.]
When courts
consider expanding the definition of charity, therefore, they must consider
whether what is being proposed is an incremental change, or one with more
complex ramifications that is better left to the legislature.
29
Secondly, looking at the scheme of the ITA , Iacobucci J. noted
the distinction between non-profit organizations and charitable organizations:
. . . given
that the present appeal concerns the definition of a charitable organization
for the purposes of the ITA , it is imperative to preserve the
distinction that the ITA makes between charitable and non‑profit
organizations. Non‑profit organizations, according to s. 149(1) (l),
include
a club,
society or association that, in the opinion of the Minister, was not a charity
within the meaning assigned by subsection 149.1(1) and that was organized and
operated exclusively for social welfare, civic improvement, pleasure or
recreation or for any other purpose except profit, no part of the income of
which was payable to, or was otherwise available for the personal benefit of,
any proprietor, member or shareholder thereof unless the proprietor, member or
shareholder was a club, society or association the primary purpose and function
of which was the promotion of amateur athletics in Canada;
Therefore according to the ITA , it must be possible to have an
organization that is “operated exclusively for social welfare” and is not
constituted for private advantage, but which is not a charitable organization.
The common law of charities must not be interpreted so as to undermine this
distinction between non‑profit organizations and charitable
organizations. [Emphasis added; para. 151.]
30
In a case involving the meaning of charity for purposes of the ITA ,
we are not applying the common law in a vacuum. It will be necessary to
consider not only the common law, but the common law in relation to the scheme
of the ITA . While I have found that the scheme of the ITA does
not support interpreting the RCAAA provisions as precluding charitable
registration of non-RCAAA sports associations, this does not mean that the
scheme of the ITA is irrelevant in considering the development of the
common law meaning of charity as it applies under the ITA .
31
To summarize, in determining if an organization is charitable under the
fourth head of Pemsel for purposes of registration under the ITA ,
it will be necessary to consider the trend of cases to decide if the purposes
are for a public benefit which the law regards as charitable. It will also be
necessary to consider the scheme of the ITA . Finally, it is necessary
to determine whether what is sought is an incremental change or a reform best
left to Parliament.
V. Application
32
In order to determine if A.Y.S.A. is a charity for purposes of the ITA ,
it is necessary to consider the common law test as it applies in the context of
the ITA . As stated in Vancouver Society, the key question is
whether A.Y.S.A.’s purposes meet this test and are for a public benefit in a
way which the law regards as charitable. In Vancouver Society,
Iacobucci J. stated, at para. 176, that “[r]ather 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.” The same applies to A.Y.S.A.
33
A.Y.S.A. claims its purposes are charitable under this fourth head
entitled “certain other purposes beneficial to the community”. While it
concedes that older English case law supports the contention that “mere sport”
cannot be charitable, it argues that the time is ripe for Canadian courts to
recognize that the promotion of amateur sports involving the pursuit of
physical fitness fits under the final Pemsel category. It argues that
sport in connection with other purposes has been recognized as charitable, but
the time has come for sport to stand on its own.
34
First, it is necessary to look to the trend in the cases. Much argument
was made at the oral hearing in this case about the meaning of a handful of
cases that have considered the charitable status of sporting activities. The
government relies on Re Nottage, [1895] 2 Ch. 649 (C.A.), and cases
which followed it as determining that “mere sport” is not charitable. A.Y.S.A.
argued at the hearing that Re Nottage should not be read as pronouncing
a general common law rule hostile to amateur sport, or that if so, it is “an
ancient decision on radically different facts”. Cases holding a sports
activity to be charitable when connected to other recognized charitable heads
such as education (In re Mariette, [1915] 2 Ch. 284; Inland Revenue
Commissioners v. McMullen, [1981] A.C. 1 (H.L.)), and an Ontario case Re
Laidlaw Foundation (1984), 13 D.L.R. (4th) 491 (Div. Ct.), which
distinguished Re Nottage and found amateur sport allied to fitness to be
charitable can also be cited.
35
Re Nottage, perhaps the seminal case, involved a trust for the
purchase of a cup as a prize for yacht racing. In finding that it was not
charitable, Lindley L.J. held:
It is a prize for a mere game. The testator himself tells us what was in
his mind: “My object in giving this cup is to encourage the sport of
yacht-racing.” Now, I should say that every healthy sport is good for the
nation — cricket, football, fencing, yachting, or any other healthy exercise
and recreation; but if it had been the idea of lawyers that a gift for the
encouragement of such exercises is therefore charitable, we should have heard
of it before now. . . . I deal with the present case on the broad ground that I
am not aware of any authority pointing to the conclusion that a gift for the
encouragement of a mere sport can be supported as charitable. [pp. 655-56]
Similarly, Lopes
L.J. held:
I am of
opinion that a gift, the object of which is the encouragement of a mere sport
or game primarily calculated to amuse individuals apart from the community at
large, cannot upon the authorities be held to be charitable, though such sport
or game is to some extent beneficial to the public. If we were to hold the
gift before us to be charitable we should open a very wide door, for it would
then be difficult to say that gifts for promoting bicycling, cricket, football,
lawn-tennis, or any outdoor game, were not charitable, for they promote the
health and bodily well-being of the community. [p. 656]
36
While in some cases athletic associations have been denied charitable
status (e.g. Inland Revenue Commissioners v. City of Glasgow Police Athletic
Association, [1953] 1 All E.R. 747 (H.L.); Laing v. Commissioner of
Stamp Duties, [1948] N.Z.L.R. 154 (S.C.)), commentators have described the
suggestion that healthy sports generally are not charitable as obiter (Tudor
on Charities (9th ed. 2003), at pp. 116-18; H. Picarda, The Law and
Practice Relating to Charities (3rd ed. 1999), at p. 128). Other cases
have distinguished Re Nottage and found sporting activities to be
charitable when connected to a purpose falling under one of the first three Pemsel
heads. For example, in Mariette, a gift for sporting facilities at a
school was held to be charitable as being for educational purposes. Similarly
in McMullen, a trust to provide facilities for pupils of schools and
universities to play football and other sports was also held to be charitable
as part of education.
37
In Laidlaw, a case involving the definition of charitable purpose
under s. 6a(a) of the Charities Accounting Act, R.S.O. 1980,
c. 65, the Ontario High Court of Justice, Divisional Court, distinguished Re
Nottage and held that the promotion of amateur athletic sport which involves
the pursuit of physical fitness may be classified as charitable (p. 523). The
definition of charitable purpose in s. 6a(a) statutorily adopted
the Pemsel categories, and identified the fourth category of charity as
“any purpose beneficial to the community, not falling under subclause (i), (ii)
or (iii)” (p. 526). The section did not, however, include the limitation that
this must be a purpose recognized by the common law as charitable. This
appears to have led the court in Laidlaw to adopt a more liberal
approach to the definition of charity (p. 528). While that may be appropriate
given the statutory definition of charity in the Charities Accounting Act,
this Court made clear in Vancouver Society that, at common law and under
the ITA , the approach is to analogize from prior cases (at paras.
176-79) and that “[p]ublic benefit alone . . . does not equal charity” (para.
183).
38
Thus, Laidlaw appears to be an anomalous case, based on a
statutory provision which adopts only part of the common law test, and
inconsistent with this Court’s holding in Vancouver Society that public
benefit alone is not enough. The authors of Waters’ Law of Trusts in Canada
(3rd ed. 2005), at p. 735, express doubt about whether Laidlaw applies
beyond the scope of the particular Ontario statute in issue. Furthermore, as
they note, “[a]s unsatisfactory as the analogy approach may be, it at least
provides some guidance, on the basis of existing cases, as to what falls within
the fourth head of charity” (p. 735 (footnote deleted)). I therefore find that
Laidlaw should be distinguished from the present appeal.
39
A.Y.S.A. further argues that s. 8.1 of the Interpretation Act,
R.S.C. 1985, c. I-21 , requires the application of provincial law to the
determination of what is charitable under the ITA and that the relevant
provincial law in this case can be found in the Laidlaw decision.
However, specific statutory definitions of charity in provincial legislation
and decisions dealing with that definition do not dictate the meaning of
charity under the ITA .
40
While the analysis in Re Nottage is rather perfunctory and should
not be considered an insurmountable barrier, a common thread in all the
decisions (other than Laidlaw) is that they accept that participating in
sport is generally beneficial, but hold nevertheless that those benefits alone
are not enough to make an organization charitable. A.Y.S.A. argues that the
common law must adapt because fitness is now recognized as important. But the
recognition of the value of exercise and fitness was far from absent in the
older cases. The trend of the cases supports the proposition that sport, if
ancillary to another recognized charitable purpose such as education, can be
charitable, but not sport in itself.
41
Although I am sympathetic to the proposition that organizations
promoting fitness should be considered charitable, there is no mention of these
objects in the Letters Patent of A.Y.S.A. The Letters Patent only refer to
promoting soccer and increasing participation in the sport of soccer.
A.Y.S.A.’s application to the CRA describes its “main objective” as being “to
offer youths in the community the opportunity to develop and hone soccer skills
through practice and competition so they can develop pride in their abilities
and soccer skills”. The application also mentions “physical fitness” and
diversion from exposure to “anti-social behaviour”. But these are clearly by-products
of its main objective, the promotion of soccer. The fact that an activity or
purpose happens to have a beneficial by-product is not enough to make it
charitable. If every organization that might have beneficial by-products,
regardless of its purposes, were found to be charitable, the definition of
charity would be much broader than what has heretofore been recognized in the
common law.
42
In referring to A.Y.S.A.’s Letters Patent and application to the CRA, I
do not wish to leave the impression that the assessment to be carried out is
formalistic in nature. That was the only evidence in the record in this case.
But the government is entitled and indeed obliged to look at the substance of
the purposes and activities of an applicant for registered charity status.
Rewriting the objects in the Letters Patent or filing a carefully worded
application will not be sufficient. The organization, in substance, must have
as its main objective a purpose and activities that the common law will
recognize as charitable. Examples of sporting activity that the government
acknowledges would be charitable include therapeutic horseback riding for
children with disabilities, or sports camps for children living in poverty. In
these examples, the objectives are ones well established as charitable.
43
In Vancouver Society, Iacobucci J. for the majority found that it
is imperative to preserve the distinction that the ITA makes between
charitable and non-profit organizations. Although it might be tempting to
consider any non-profit activity for social welfare to be charitable, the ITA
clearly anticipates that not all non-profit social welfare activities will be
charitable. This signals that the scheme of the ITA does not support a
wide expansion of the definition of charity. The concern expressed in Vancouver
Society to maintain the distinction between non-profit and charitable
organizations, also informs the present appeal.
44
Finally, it is necessary to consider whether what is proposed is an
incremental change. A.Y.S.A. argues that as some sporting organizations are
already charities, it would be incremental to broaden charitable status to
youth amateur fitness sports. The government submits that 21 percent of all
non-profit organizations in the country are sports and recreation
organizations, and that the potential recognition of these organizations as
charities could have a significant impact on the income tax system. I agree
with the government that this would seem to be closer to wholesale reform than
incremental change, and is best left to Parliament. While it may be desirable
as a matter of policy to give sports associations the tax advantages of
charitable status, it is a task better suited to Parliament than the courts.
In this regard, I note that in the United Kingdom, the charitable status of
“the advancement of amateur sport” was brought about through statute (Charities
Act 2006 (U.K.), 2006, c. 50, s. 2(2)(g)). As stated by the
majority in Vancouver Society, substantial change in the definition of
charity must come from the legislature rather than the courts.
VI. Conclusion
45
I find that A.Y.S.A. does not qualify for registration as a charity
under s. 248(1) of the ITA because its purposes and activities are not
charitable. Therefore, I would dismiss the appeal with costs.
The following are the reasons delivered by
46
Abella J. — The issue in
this appeal is whether A.Y.S.A. Amateur Youth Soccer Association, which
operates exclusively at the provincial level, can qualify as a “registered
charity” under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp .). If it
can, it is entitled to receive both income tax exemption under s. 149(1)(f)
of the Act and the ability to issue tax receipts for donations under ss.
110.1(1) , 118.1(1) and 118.1(3) . If it does not qualify, it can only claim the
tax exemption to which it is entitled as a “non-profit organization” pursuant
to s. 149(1) (l).
47
My colleague Justice Rothstein concludes that A.Y.S.A. cannot qualify as
a “registered charity”, through an application of the common law test developed
by the House of Lords in Commissioners for Special Purposes of the Income
Tax v. Pemsel, [1891] A.C. 531. In my view, with great respect, resort to
the common law test for determining what is a charity is unnecessary. I agree
with the Federal Court of Appeal that the registered Canadian amateur athletic
association (“RCAAA”) provisions of the Income Tax Act prevent A.Y.S.A.
from being treated as a charity under the Income Tax Act .
48
Under s. 248(1) of the Income Tax Act , a “registered charity” is
defined to include “a charitable organization, private foundation or public
foundation, within the meanings assigned by subsection 149.1(1) ”. Section
149.1(1) defines a “charitable organization” as an organization “all the
resources of which are devoted to charitable activities carried on by the
organization itself”. “Charitable activities” itself is not defined. As a
result, as this Court held in Vancouver Society of Immigrant and Visible Minority
Women v. M.N.R., [1999] 1 S.C.R. 10, the Income Tax Act “implicitly
relies upon the common law for guidance” (para. 143).
49
However, reliance on the common law is not necessary in this case. In
1972, when the RCAAA provisions were enacted, the common law was clear. The
promotion of amateur sport was not a charitable purpose. Against this
backdrop, Parliament introduced the RCAAA scheme into the Income Tax Act to
confer charity-like tax benefits only on certain amateur athletic associations,
namely, those whose primary focus is national. RCAAAs receive income tax
exemption under s. 149(1) (l) and the ability to issue tax receipts for
donations under ss. 110.1(1) , 118.1(1) and 118.1(3) , the same tax benefits
enjoyed by charities.
50
Under s. 248(1), a RCAAA is defined as “an association that was created
under any law in force in Canada, that is resident in Canada and that (a)
is a person described in paragraph 149(1) (l), and (b) has, as its
primary purpose and its primary function, the promotion of amateur athletics in
Canada on a nation-wide basis”.
51
The second aspect of this definition is determinative in this case.
Paragraph (b) of the definition provides that a RCAAA must promote
amateur athletics in Canada on a “nation-wide basis”. This reflects a clear
policy choice on the part of Parliament to restrict the extension of
charity-like tax benefits to national amateur athletic associations.
52
The legislative history of the RCAAA provisions confirms that Parliament
specifically put its mind to drawing a distinction between amateur athletic
associations operating on a national level and those that operate on a regional
or provincial one. In April 1970, during the budget debate, MP Judd Buchanan
criticized the White Paper’s recommendation that charitable donations be
restricted to national organizations:
I would urge
that the charitable deductibility clauses not be as restrictive as is suggested
in the white paper on tax reform, which proposes that national amateur athletic
associations only be added to the list of eligible charitable organizations. I
believe that many local organizations are deserving of the same treatment and
support.
(House of Commons Debates, vol. VI, 2nd Sess., 28th Parl., April
23, 1970, at p. 6235)
53
The issue was raised again the following year during debates on Bill
C-259, which enacted the RCAAA scheme, when MP Marcel Lambert stated the
following:
The
organizations to which deductible donations may be made have been broadened in
scope to include registered Canadian amateur athletic associations, though
these must be of a national character. I think this will also bring us up
against difficulties in interpretation; or, shall I say, some people will be
terribly disappointed.
(House of Commons Debates, vol. IX, 3rd Sess., 28th Parl., October
25, 1971, at p. 9009)
54
Nonetheless, Parliament decided to confer charity-like tax benefits only
on national amateur athletic associations. This appears to have been
driven at least in part by administrative concerns. In Maccabi Canada v.
M.N.R., 98 D.T.C. 6526, the Federal Court of Appeal noted that Parliament’s
intent was to “ensure that the issuing of receipts to donators would come from
a single organization at the national level and that Revenue Canada would not
have to interface with a myriad of provincial, regional and local
organizations” (para. 8).
55
At the same time, however, Parliament amended the definition of
“non-profit organizations” in s. 149(1) (l) to ensure that RCAAAs could
support, through funding, their regional and local members.
56
The concept of “charity” may be a unique beast in the Income Tax Act ,
but it is nevertheless a caged one. The cage in this case is the RCAAA
statutory scheme. Those provisions explicitly confer charity-like benefits
only on amateur athletic associations with a national focus. Parliament’s
intention to exclude all other amateur athletic associations could hardly be
clearer. In view of this explicit statutory directive, there is no need to
seek clarification from the common law.
57
The conclusion that the RCAAA provisions provide the exclusive framework
for the conferral of charity-like tax benefits on amateur athletic
associations, is not based on legislative silence. It is based on the wording
of those provisions, and in particular the “nation-wide” requirement in the
definition section, as well as on the legislative history and the common law as
it existed when those provisions were introduced, all of which argue for
interpreting the RCAAA provisions as occupying the field.
58
Whether the common law can be said to have evolved to include amateur
athletic associations is, with respect, only of assistance in the face of a
statutory vacuum. Any such vacuum for amateur athletic associations was filled
by the enactment of the RCAAA provisions. Because A.Y.S.A. operates
exclusively at the provincial level, it has been denied access, by statute, to
charitable status, a denial the common law is powerless to overcome.
59
I would dismiss the appeal.
APPENDIX
Income Tax
Act, R.S.C. 1985, c. 1 (5th Supp .)
110.1 (1) [Deduction for gifts] For the purpose of computing
the taxable income of a corporation for a taxation year, there may be deducted
such of the following amounts as the corporation claims:
(a)
the total of all amounts each of which is the fair market value of a gift
(other than a gift described in paragraph (b), (c) or (d))
made by the corporation in the year or in any of the 5 preceding taxation years
to
(i) a
registered charity,
(ii) a
registered Canadian amateur athletic association,
(iii) a
corporation resident in Canada and described in paragraph 149(l)(i),
(iv) a
municipality in Canada,
(v) the
United Nations or an agency thereof,
(vi) a
university outside Canada that is prescribed to be a university the student
body of which ordinarily includes students from Canada,
(vii) a
charitable organization outside Canada to which Her Majesty in right of Canada
has made a gift in the year or in the 12‑month period preceding the year,
or
(viii) Her
Majesty in right of Canada or a province,
not exceeding
the lesser of the corporation’s income for the year and the amount determined
by the formula
0.75A + 0.25 (B + C +
D)
where
A is the corporation’s income for the year computed without reference
to subsection 137(2),
B is the total of all amounts each of which is a taxable capital gain
of the corporation for the year from a disposition that is the making of a gift
made by the corporation in the year and described in this paragraph,
C is the total of all amounts each of which is a taxable capital gain
of the corporation for the year, because of subsection 40(1.01), from a
disposition of a property in a preceding taxation year, and
D is the total of all amounts each of which is determined in respect
of the corporation’s depreciable property of a prescribed class and equal to
the lesser of
(A) the
amount included under subsection 13(1) in respect of the class in computing the
corporation’s income for the year, and
(B) the
total of all amounts each of which is determined in respect of a disposition
that is the making of a gift of property of the class made by the corporation
in the year that is described in this paragraph and equal to the lesser of
(I) the
proceeds of disposition of the property minus any outlays and expenses to the
extent that they were made or incurred by the corporation for the purpose of
making the disposition, and
(II) the
capital cost to the corporation of the property;
. . .
118.1
(1) [Definitions] In this section,
“total charitable gifts” [« total des dons de bienfaisance »]
of an individual for a taxation year means the total of all amounts each of
which is the fair market value of a gift (other than a gift the fair market
value of which is included in the total Crown gifts, the total cultural gifts
or the total ecological gifts of the individual for the year) made by the
individual in the year or in any of the 5 immediately preceding taxation years
(other than in a year for which a deduction under subsection 110(2) was claimed
in computing the individual’s taxable income) to
(a) a
registered charity,
(b) a registered Canadian amateur athletic association,
(c) a
housing corporation resident in Canada and exempt from tax under this Part
because of paragraph 149(1) (i),
(d) a
Canadian municipality,
(e) the
United Nations or an agency thereof,
(f) a
university outside Canada that is prescribed to be a university the student
body of which ordinarily includes students from Canada,
(g) a
charitable organization outside Canada to which Her Majesty in right of Canada
has made a gift during the individual’s taxation year or the 12 months
immediately preceding that taxation year, or
(g.1) Her
Majesty in right of Canada or a province,
to the extent
that those amounts were
(h) not
deducted in computing the individual’s taxable income for a taxation year
ending before 1988, and
(i) not
included in determining an amount that was deducted under this section in
computing the individual’s tax payable under this Part for a preceding taxation
year;
. . .
(3) [Deduction by individuals for gifts] For the purpose of computing
the tax payable under this Part by an individual for a taxation year, there may
be deducted such amount as the individual claims not exceeding the amount
determined by the formula
(A x B) + [C x (D ‑
B)]
where
A is the appropriate percentage for the year;
B is the lesser of $200 and the individual’s total gifts for the
year;
C is the highest percentage referred to in subsection 117(2) that
applies in determining tax that might be payable under this Part for the year;
and
D is the individual’s total gifts for the year.
. . .
149. (1) [Miscellaneous exemptions] No tax is payable under
this Part on the taxable income of a person for a period when that person was
. . .
(f) a
registered charity;
. . .
(l) a
club, society or association that, in the opinion of the Minister, was not a
charity within the meaning assigned by subsection 149.1(1) and that was
organized and operated exclusively for social welfare, civic improvement,
pleasure or recreation or for any other purpose except profit, no part of the
income of which was payable to, or was otherwise available for the personal
benefit of, any proprietor, member or shareholder thereof unless the
proprietor, member or shareholder was a club, society or association the
primary purpose and function of which was the promotion of amateur athletics in
Canada;
149.1
(1) [Definitions] In this section,
. . .
“charitable organization” means an organization, whether or not
incorporated,
(a) all
the resources of which are devoted to charitable activities carried on by the
organization itself,
(b) no
part of the income of which is payable to, or is otherwise available for, the
personal benefit of any proprietor, member, shareholder, trustee or settlor
thereof,
(c) more
than 50% of the directors, trustees, officers or like officials of which deal
with each other and with each of the other directors, trustees, officers or
officials at arm’s length, and
(d) where
it has been designated as a private foundation or public foundation pursuant to
subsection (6.3) of this section or subsection 110(8.1) or (8.2) of the Income
Tax Act , chapter 148 of the Revised Statutes of Canada, 1952, or has applied
after February 15, 1984 for registration under paragraph 110(8)(c) of
that Act or under the definition “registered charity” in subsection 248(1) , not
more than 50% of the capital of which has been contributed or otherwise paid
into the organization by one person or members of a group of persons who do not
deal with each other at arm’s length and, for the purpose of this paragraph, a
reference to any person or to members of a group does not include a reference
to Her Majesty in right of Canada or a province, a municipality, another
registered charity that is not a private foundation, or any club, society or
association described in paragraph 149(1) (l);
248.
(1) [Definitions] In this Act,
. . .
“registered Canadian amateur athletic association” means an
association that was created under any law in force in Canada, that is resident
in Canada and that
(a) is
a person described in paragraph 149(1) (l), and
(b) has,
as its primary purpose and its primary function, the promotion of amateur
athletics in Canada on a nation‑wide basis,
that has
applied to the Minister in prescribed form for registration, that has been
registered and whose registration has not been revoked under subsection 168(2);
“registered charity” at any time means
(a) a
charitable organization, private foundation or public foundation, within the
meanings assigned by subsection 149.1(1) , that is resident in Canada and was
either created or established in Canada, or
(b) a
branch, section, parish, congregation or other division of an organization or
foundation described in paragraph (a), that is resident in Canada and
was either created or established in Canada and that receives donations on its
own behalf,
that has
applied to the Minister in prescribed form for registration and that is at that
time registered as a charitable organization, private foundation or public
foundation;
. . .
Interpretation Act, R.S.C. 1985, c. I‑21
8.1 Both
the common law and the civil law are equally authoritative and recognized
sources of the law of property and civil rights in Canada and, unless otherwise
provided by law, if in interpreting an enactment it is necessary to refer to a
province’s rules, principles or concepts forming part of the law of property
and civil rights, reference must be made to the rules, principles and concepts
in force in the province at the time the enactment is being applied.
Appeal dismissed with costs.
Solicitors for the appellant: Fasken Martineau
DuMoulin, Vancouver.
Solicitor for the respondent: Attorney General of
Canada, Ottawa.
Solicitors for the intervener: Worton Hunter &
Callaghan, Edmonton; Gowling, Lafleur, Henderson, Toronto; Miller Thomson,
Toronto.