Section 149.1

The objects of a Quebec-based corporation ("PTAQ") focused on advancing education through the production and distribution of educational television programming. Agreements with a Vermont public television station ("VPT") provided that VPT would produce non-commercial television as agent for and at the direction of PTAQ and engage in fund-raising for PTAQ.

Scott JA upheld the Minister's revocation of PTAQ's registration as a charitable organization. In finding that PTAQ was not carrying on charitable activities thorough VPT, as its agent, and after stating (at para.44) that "the control over the agent's activities is a key element to establish that it maintained direction and control over its resources" (para. 44), Scott JA stated (at para. 46) that evidence did "not indicate any form of control over the choice of programs offered to PTAQ by its agent" and instead revealed "that VPT presented ‘predetermined packages' to PTAQ every year." Furthermore, PTAQ failed to establish "that it exercised monthly financial monitoring and control of expenditures… that it funded " (para. 48), and "the fundraising documents… indicated that VPT was conducting the fundraising activities on its own behalf" (para. 50). PTAQ instead was a "conduit" for VPT, i.e., "only used to issue receipts for donations received by VPT from Canadian donors" (para. 55).

The appellant ("Prescient") made a gift of $500,000 to a US charity ("DATA") that was alleged by the Minister to be a non-qualified donee , and participated in a series of transactions effecting the sale of a farm business of a private B.C. company ("Vision Poultry") in a manner that provided tax advantages to Vison Poultry and its individual shareholders. The Court found that the DATA donation was not grounds for revoking Prescient's registration as a charitable public foundation, but that the Vision Poultry transactions were.

Respecting the DATA donation, Mainville, JA first noted (at para. 12) that the applicable standard under s. 172(3) for "extricable question of law" was one of correctness rather than reasonableness. Although the s. 149.1(1) definition of "charitable purposes" includes the disbursement of funds to a qualified donee, the "charitable purposes recognized under the Act extend beyond disbursements to qualified donees" (para. 25). As it was not disputed "that a gift to a foreign charity is a charitable purpose under the common law" (para. 26), the charitable purpose test was satisfied. There was no authority offered by the Minister for the proposition that "to qualify as charitable, a charitable public foundation must…only disburse funds to a qualified donee" (para. 30). (Mainville JA noted that proposed paragraphs 149.1(2)(c), 149.1(3)(b.1) and 149.2(4)(b.1) would have led to a different conclusion if they were in force.)

The Vision Poultry transactions are briefly summarized in the chart immediately below, but are not described in detail as they were lacking in legal and tax logic:

Mainville, JA accepted (at para. 37-39) the Minister's position "that these transactions amounted to [Prescient] participating in a tax planning arrangement for the private benefit of others and, as such, were not entered into for charitable purposes" (para. 36). Furthermore, the investment in shares of Vision Poultry (which became worthless as part of the transactions) did not qualify as a "related business activity," as "it was known, at the outset of the activity, that its outcome would be a major loss" (para. 40).

The appellant solicited and collected used household items, provided the items to an independent for-profit retail corporation ("Value Village"), received from Value Village 50% of the proceeds from the sale of the items and forwarded (as required by the agreement between the appellant and Value Village) all the funds received by it to the Alberta Association for the Mentally Handicapped.

The appellant was operated exclusively for charitable purposes. "The sole purpose of the appellant, at all times, has been and is to raise money for the benefit of persons (and their families) suffering from mental retardation. The means chosen to raise such monies, i.e., the solicitation for and collection of used goods is, in reality, simply a conversion of goods into money and does not itself change the nature of the appellant's operation."

The Appellant, whose principal objects were the prevention of poverty, was registered as a qualified charity in 1993, and since that time provided credit counselling services, an education outreach program and a debt management program. In confirming the annulment of the Appellant’s registration, Webb JA found that its activities relating to the prevention of poverty were not being carried out for a charitable purpose, noting (at para. 16) that “the Appellant did not refer to any case that have held that the relief of poverty will include the prevention of poverty,” (at para. 17) that “it is clear that the Appellant is assisting many consumers who are employed and who have assets and therefore would not necessarily, as of the time of receiving the assistance, be considered to be in poverty,” and (at para. 18) that “just as in the United Kingdom, it will require an act Parliament to add the prevention of poverty as a charitable purpose.”

Consistently with Vancouver Society, Webb JA also dismissed the Appellant’s argument that it should succeed under the fourth head of charitable purposes (other benefit to the community). Webb JA stated (at para 22):

[T]hose individuals who have been assisted in paying down their debts and better managing their finances have benefited but it is far from clear why this is not a private advantage enjoyed by these individuals or how this would be beneficial to the community in a way that the law regards as charitable.

Before dismissing the appellant’s appeal under s. 172(3)(a.1) of the revocation of its registration as a charitable organization, Ryer JA noted that one of the grounds for revocation was that the Appellant had failed to devote all of its resources to charitable activities carried on by it (which were not considered to include amounts paid to disabled fundraisers), stating (at paras. 58, 59 & 61):

…[O]nly one percent of the funds raised by the Appellant was deployed towards charitable activities in the period under review. This led the Minister to determine that fundraising itself was the Appellant’s primary activity during this period.

…[A]pproximately 70% of the Appellant’s revenues for the relevant period were expended on fundraising. …

…[F]undraising itself cannot become a raison d'être for a charity. …[T]he high level of fundraising activities undertaken … can reasonably be regarded as having become an end in itself.

Respecting a further ground that the appellant had provided undue benefits to fundraisers and directors, he stated (at para. 43):

[A] charitable organization is required to devote all of its resources to the charitable activities that it carries on. This requirement is necessarily breached if resources of the organization are instead devoted to the provision of undue benefits.

Additional grounds for revocation, which were accepted, were:

• making gifts to non-qualified donees;
• failing to maintain adequate books and records and
• failing to file an information return as required by the Act.

In finding that the Minister was correct that the establishing of a sanctuary and sculpture park did not constitute a charity for religious purposes, Noël CJ stated (at para. 5):

[T]he concept of "Oneness of Reality" advanced by the appellant is so broad and vague as to be practically unascertainable. The appellant has failed to show the existence of a "particular and comprehensive system of faith and worship" or a body of teachings and doctrine that would bring the concept which it promotes within the legal acceptation of the word religion... .

Likewise, merely "expressing aspirations" to initiate and support "multi-religious, educational programs and services and will organize lectures, workshops and seminars" were not a basis for overturning the Minister's findings, as (para. 8):

...the Minister may require the applicant to provide detailed and credible plans for the latter's proposed activities.

The Court declined to overrule the Minister's discretionary decision to deny the appellant charitable registration. One of the Minister's bases for the decision was concern over the appellant's involvement with a business corporation ("Fort Alexander Holdings Ltd."), and the possibility that the appellant's resources might be diverted from charitable activities. The Minister requested more information in respect of this concern, which the appellant did not provide. Stratas JA stated (at para. 8):

On the facts, the Minister was well within the range of acceptability and defensibility in requiring more and better information from the appellant. It is one thing to tender draft documents expressing aspirations; it is quite another to tender final documents expressing plans that are detailed and credible.

The taxpayer was incorporated for the purpose of providing unbiased and well researched news and public affairs programs. The Court of Appeal affirmed the Minister's decision that the taxpayer's purposes did not qualify as charitable purposes, as they fell under none of the recognized heads of charitable purpose. Applying Vancouver Society, The Court of Appeal found that the proposed activities did not fall under the head of education, as they did not meet the threshold of being a "legitimate, targeted attempt at educating others, whether through formal or informal instruction, training, plans of self-study, or otherwise." (Vancouver Society at para. 171.)

Neither did the proposed activities fall under the head of "other purposes beneficial to the community." Mainville J.A. stated (at para. 30) that, "in order to be charitable, the appellant's purposes must be of special benefit to the community, with an eye to the society's current social, moral, and economic context." The taxpayer identified its audience as the general public, which meant its services were not targeted at a group in need of special assistance. Moreover, the taxpayer did not set out to create new information infrastructure for the public, but only to provide information over existing infrastructure - a fact which distinguished the present case from Vancouver FreeNet.

The appellant, which provided accommodation in a youth hostel, was unsuccessful in a submission that, by facilitating travel by providing low-cost accommodation, it was promoting the advancement of education, and was found to be carrying on a commercial business. Its appeal from a revocation under s. 149.1(2)(a) was dismissed.

An organization that was devoted to the promotion of amateur youth soccer in Ontario was not precluded from arguing that its activities were devoted to charitable purposes notwithstanding that it did not qualify as a registered Canadian amateur athletic association (an "RCAAA") (given its restriction to Ontario communities): the words used by Parliament respecting RCAAAs did not show any intention that the regime for such associations would occupy the field for sports associations so that an association which could not qualify as an RCAAA could not qualify as being a charity. However, the scheme of the Act (which made a distinction between non-profit organizations operated exclusively for social welfare, and charities) signalled that the Act did not support a wide expansion of the definition of charity, in recognizing sports and recreation organizations as being charitable would be "closer to wholesale reform than incremental change" (para. 44). Accordingly, the appellant did not qualify for registration as a charity.

A company whose objects were to work with governmental authorities and grass roots communities of various tourism destination markets to create and develop model tourism development projects that contributed to the realization of international human rights and environmental norms, and to produce and disseminate materials that provided travellers and tourists with information on socially and environmentally responsible tourism, was not charitable.

The appellant, which had no staff in Israel and claimed it was carrying on its charitable works in Israel (the operation of three orphanages) through its agent, Rabbi Stern, was unable to establish that the charitable works at the three orphanages were being carried out on its behalf rather than by the three institutions that were operating the orphanages, which had been established 33 years before the incorporation of the appellant.

A foundation that operated a retreat in the Lake Region of England did not qualify as a charitable organization given that its objects included providing financial assistance for the establishment and continued support of "individual Christians and Christian organizations" (which could include non-qualified donees) and given that it was in the complete discretion of attendees at the retreat whether they would participate at all in religious activities. Sexton J.A. stated (at p. 6401) that "there is no targeted attempt to promote religion or to take positive steps to sustain and increase religious belief".

The Appellant maintained the position that it was carrying on charitable activities through its agent in Israel. In dismissing an appeal of the decision of the Minister to revoke the appellant's registration as a charitable organization, Malone J.A. stated (at p. 6852):

"While a charity may carry on its charitable activities through an agent, the charity must be prepared to satisfy the Minister that it is at all times both in control of the agent, and in a position to report on the agent's activities."

After reviewing the authorities suggesting that the persuasion or indoctrination of people is not an activity in support of a charitable object, Stone J.A. indicated (at p. 5250) that "despite the object stated in the appellant's constituting documents its true mission is more likely that of advocating its strongly held convictions on important social and moral issues in a one-sided manner to the virtual exclusion of any equally strong opposing convictions", and dismissed an appeal against revocation of the appellant's status as a registered charity.

The procedures followed by Revenue Canada also had events to procedural fairness.

The purposes of the appellant were not exclusively charitable because they included not only education of immigrant women but also doing that which was "conducive" to the attainment of such objects (which was a broader term than "incidental").

After noting (at p. 5043) that the educational charitable head should not be restricted to the "formal training of the mind" and that any knowledge or training that "is provided in a structured manner and for a genuinely educational purpose - that is, to advance the knowledge or abilities of the recipient - and not solely to promote a particular point of view or political orientation" would qualify, he went on to note that the intended purposes (and the actual activities that were carried out) were not restricted to such matters as training the beneficiaries how to apply for a job but also extended to establishing a job skills directory, networking, liaising for accreditation of credentials, soliciting job opportunities and offering referral services. These were not educational, and did not fall under the fourth head.

The activities of the appellant, which consisted of participation in colloques and workshops organized by others, and the publication of six pamphlets, five of which were on issues of concern to women, especially handicapped women, were not charitable.

The appellant, whose objects included the protection of the unborn, elderly and handicapped, the promotion of true Christian family values, the encouragement of chastity, and the teaching of natural family planning had its registration properly revoked by the Minister. The distribution of literature and the holding of conferences by it did not qualify as the advancement of education (i.e., activities directed towards the formal training of the mind or the improvement of a useful branch of human knowledge). Furthermore, given that "the jurisprudence generally supports the proposition that activities primarily designed to sway public opinion on social issues are not charitable activities" (p. 6200), and given that "any determination by this Court as to whether the propagation of such views is beneficial to the community and thus worthy of temporal support through tax exemption would be essentially a political determination" (p. 6201), the appellant's activity did not qualify as serving purposes beneficial to the community within the fourth category of what is charitable.

A non-share corporation whose objects were to "educate the public and encourage an awareness and understanding of social justice conditions" and "to interact with local development justice organizations as well as churches and missions to further such educational programs" did not qualify as a charitable organization on the basis of advancing education, or on other grounds.

The appellant, whose principal activity was the publication and distribution of the magazine "Briarpatch", did not come within the educational advancement branch of what was considered to be charitable given that it was "evident that the magazine is not directed toward the training of the mind through structured analysis or presentation of knowledge" (at p. 6296). In order to dispose of a submission that the organization had purposes beneficial to the community under the general charitable head, it was sufficient to note that the topics canvassed in the magazine were not restricted to matters that were of direct relevance to Canada's poor, so that it was not possible to conclude that the magazine spoke to a specific, identifiable group which deserved or needed special recognition or protection.

The taxpayer, which was incorporated as a non-profit organization in order to provide free access to all persons in the lower mainland of British Columbia to the information highway, including the Internet, qualified as a charitable organization. Hugessen J.A. noted (at p. 6444) that "the free exchange of information amongst members of society has long been recognized as a public good" and noted that because the appellant provided access to messages but not the messages themselves, it did not detract from its charitable status that its services very well might be used for commercial or other non-public purposes.

The appeal of a free-standing B.C. abortion clinic from the failure of the Minister to accept its application for registration as a charitable organization was allowed given that abortion, when performed by a physician, constitutes a form of health care, the absence of any illegality to the clinic's activities and the absence of clear statements of public policy on the issue of abortion. Décary J.A. stated (p. 6008):

"With respect to the argument that there can be no charity at law absent public consensus ... to define 'charity' through public consensus would be a most imprudent thing to do. Charity and public opinion do not always go hand in hand; some forms of charity will often precede public opinion, while others will often offend it. Courts are not well-equipped to assess public consensus, which is a fragile and volatile concept."

While some incidental measure of personal benefit to an organization's membership may not deprive it of its charitable character, the Minister rightly concluded that in this case the element of benefit to the membership was too high.

A neighbourhood association which devoted most of its resources to advancing various causes that were perceived to affect the well-being of the community (e.g., opposing spending cut-backs that would stop poor children from attending summer day camps, opposing adverse changes to public transit, and battling condominium conversions in a low-rent area) did not come under the fourth head, and was tainted by its political character. "It is not a near miss with respect to the advancement of education, which an enlightened public opinion must then recognize through the fourth category."

S.149.1(b.2) did not apply because its political activities were not merely ancillary.

An unincorporated association whose objects and activities entailed establishing links between residents of Toronto and Volgograd in order to reduce international tensions, was political rather than charitable. Activities aimed at establishing a particular climate of opinion and at promoting an attitude of mind, were political.

The presentation to the public of selected items of information and opinion on the subject of pornography did not entail the advancement of education, and therefore was not charitable. In order for there to have been advancement of education in its legal sense, it would be necessary to find an element of formal training of the mind or improvement of a useful branch of human knowledge.

The primary purpose of the appellant's activities could not be classified as beneficial to the community under the fourth head of charity, but instead was political, e.g., the procuring of changes in the law.

Given the inadequacies of the record, it was unwise to express any concluded opinions on whether the advancement of multiculturalism generally or of the cultural interest of an individual ethnic component of the national mosaic was to be considered a charitable objective.

A non-profit corporation whose main objects were to produce radio and television programs of relevance to native people in British Columbia, to train such natives as communications workers and to publish a newspaper on subjects of relevance to such people, was held to be charitable under the general head in light inter alia of the character of Indians as "a people set apart for particular assistance and protection in many aspects of their lives."

Although "an organization should not lose its status as a charitable organization because of some quite exceptional and sporadic activity in which it may be momentarily involved," the appellant, here, was not entitled to be registered as a charity because of "sustained efforts to influence the policy-making process", e.g., taking part in rallies at Queen's Park to protest against a proposal by the Ontario Government to bring changes to the Family Benefits program, and being involved with the Committee to Improve the Scarborough Property Standards By-laws (per Marceau,J.).

Incorporated private schools which devoted their resources to teaching pupils from a Christian perspective were charities.

Since the business of farming for a profit was the appellant's main activity, it did not qualify. "The business of farming is neither a religious nor a charitable activity ... and this is so even if that business is carried on by persons believing farming to be the only activity compatible with a truly religious life ... . Moreover, a commercial activity ... does not become a charitable activity within the meaning of section 149 for the sole reason that it is carried on by a charitable person with the intention of using income derived from that business for charitable purposes."

A trust, which was a charitable foundation, did not qualify as a public foundation as it had a single trustee (a registered trust company). Dawson JA stated (at paras. 30-33) that the references to "more than 50%" of the other trustees, the trustees dealing with "each other," and their dealing "at arm's length" (and "[m]oreover, a single trustee is not at arm's length from itself") showed an unequivocal intention that there be multiple trustees. Furthermore, an examination of the legislative context and purpose indicated that "the requirement that there be more than one arm's length trustee provides greater assurance that a public foundation will not be used for tax avoidance purposes" (para. 42).

The appellant ("Prescient") had served as an intermediary in an asset sale, and thereby attempted to confer on private individuals similar tax advantages to those enjoyed by charitable foundations. In the course of the asset sale, the taxpayer and several other charitable foundations acquired 95% of the shares of a farm corporation, and donated the farm assets to another foundation.

In the course of affirming the Minister's decision to revoke Prescient's charitable registration (see above fore details), Mainville JA noted that Prescient's dealings with the farm corporation did not qualify as a "related business activity," as "it was known, at the outset of the activity, that its outcome would be a major loss" because the farm corporation's assets were going to be donated (para. 40).

A business of producing and selling maple syrup through directors who were remunerated for their efforts was not a related business. An argument that the maple syrup business should be regarded as a related business because the profit generated was deposited in an account for use at some future time to construct a community centre, was rejected.

The Minister refused to register Earth Fund as a charitable foundation. Earth Fund proposed to carry on lottery operations in conjunction with certain business corporations and to disburse its share of the profits from such operations to entities that would be "qualified donees." Earth Fund would not carry on any charitable activities itself. Before dismissing Earth Fund's appeal, Sharlow JA stated (paras. 30-31):

I do not accept the argument of counsel for the appellant that the Alberta Institute case is authority for the proposition that any business is a "related business" of a charitable foundation if all of the profits of the business are dedicated to the foundation's charitable object. The Minister in that case was arguing that Alberta Institute was a "wholesaler of goods", but in fact, Alberta Institute was simply soliciting donations of goods which it converted to money. This is somewhat different from the traditional fund raising activities of a foundation, but the difference is only a matter of degree.

By contrast, the appellant proposes to do nothing except market and sell lottery tickets in a manifestly commercial arrangement that will, if all goes as planned, result in a profit that will be donated, I assume, to qualified donees. The appellant is in exactly the same position as any commercial enterprise that commits itself to apply its profits to charitable causes.

The appellant solicited and collected used household items, provided the items to an independent for-profit retail corporation ("Value Village"), received from Value Village 50% of the proceeds from the sale of the items and forwarded (as required by the agreement between the appellant and Value Village) all the funds received by it to the Alberta Association for the Mentally Handicapped.

Although the appellant may have had an "undertaking" under the extended meaning of "business", any such business was a related business. "The commercial operation at bar is exclusively related to charitable purposes since all monies collected are so allocated."

Laskin JA confirmed CRA’s decision to revoke the charitable registration of a charity (Many Mansions, whose object was advancing Christian tenets and observances) on various grounds, including that it “furnished its pastor with an office and permitted him on three occasions during the audit period to use meeting rooms on Many Mansions’ premises in operating a private business.” He rejected Many Mansions’ submission that such use “was merely ancillary or incidental to the fulfilment of Many Mansions’ charitable purposes,” and found:

While paragraph 149.1(6)(a) permits a charitable organization itself to carry on a related business without contravening the requirement to devote all its resources to charitable activities, the pastor’s private business does not come within this exception.