Transcript

Slide 1:

Welcome to segment 2 called "Four types of political activities, Charitable vs. political activities", part of the "Political activities (Policy statement CPS-022)" webinar.

Slide 2:

The CRA's explanation of what it considers to be a political activity is described in section 6.2 of our policy on political activities, Policy Statement CPS-022.

Often, when political activities are discussed in the media or other venues, they are described in very broad and vague terms.

For example, a newspaper article might state that charities in Canada carry out advocacy, lobbying, or political activities without necessarily defining what those terms mean.

But, for the CRA, the only activity that fits the description of any of the four types of political activities in our policy is a political activity (with the one exception of representations made directly to a government—see section 7.3 of our policy on political activities, CPS-022)

This slide shows the first type of political activity—a charity must explicitly communicate a call to action, which means encouraging the public to contact an elected representative or public official in order to try to retain, change, or oppose a law, policy or decision of any government.

This statement contains a lot of information. Before I provide an example of this type of political activity, I'd like to take a minute to go through all the various parts of this sentence.

The first part of the sentence refers to laws, policies, and decisions. This means, in summary, that political activities involve much more than just trying to change a law.

Political activities also include actions aimed at government policies—for example, it could include a municipal government's policies on land use within its city's boundaries, as well as government decisions, for example, this could include a decision by the federal government on which company to buy certain supplies and equipment from.

And, a political activity includes more than just seeking to make a change—it includes attempts to retain (for example, making sure a law, policy, or decision remains in force), or oppose (that is, trying to eliminate an existing law, policy, or decision, or trying to make sure one is not passed).

Finally, political activities are not restricted to the Canadian government. A charity is carrying out a political activity if it tries to influence the government of any foreign country, and also any level of government, whether municipal, provincial/territorial, or federal.

Returning to this first type of political activity, an example could be a charity that is registered with the charitable purpose of helping refugees who have arrived in Canada. The charity may organize a march on Parliament Hill, where the director makes a speech and calls on members of the public to contact their members of Parliament to urge reform of legislation related to refugee status. This would be a call to political action that is seeking to change legislation in Canada, at the federal level.

Slide 3:

The second type of political activity is an explicit communication to the public that a law, policy, or decision of any level of any government should be retained, changed, or opposed.

This kind of communication could take many forms, such as articles posted on a charity's website, a message distributed through an electronic newsletter, an advertisement in a print newspaper, or comments made through social media sites such as Facebook or Twitter.

For example, a charity may be registered to relieve conditions associated with aging by providing services for senior citizens in a particular city. The charity learns that the city's municipal government is planning to cut costs by cancelling some bus routes that many seniors depend on. The charity begins a campaign to communicate to the public that this decision should be reversed, by distributing leaflets, posting flyers, and taking out advertisements in the local newspapers.

Slide 4:

The third type is an activity where a charity indicates in any of its materials that the intent of the activity is to incite, or organize to put pressure on, an elected representative or public official in order to retain, change, or oppose a law, policy, or decision of government.

The term materials is defined by the CRA very broadly. Materials can include internal or external publications, documents, messages, or any other records. For example, a charity might indicate the intent of an activity is to pressure the Prime Minister to change a law in a publically distributed newsletter, or in an email sent internally between two directors of the charity. Either would make the activity a political activity.

The nature of the activity itself has no bearing on this type of political activity. An activity could appear to be entirely non-political in its nature, but if any external or internal material explicitly indicates the intent of the activity is to incite, or organize to put pressure on, a government to retain, change, or oppose a law, policy, or decision, then the activity becomes a political activity.

For example, a charity may be registered to promote health by providing assistance to people with high blood pressure. The charity posts articles on its website warning of the dangers of high salt levels. These articles appear to be merely an effort to inform Canadians about how to make their diets healthier. But, in the minutes of a meeting by the directors of the charity, it is acknowledged that the intent of posting these articles is to incite readers to contact their member of Parliament to amend the regulations regarding salt levels in food. In this case, the activity is a political activity.

Slide 5:

The fourth type of political activity is a gift from a registered charity to another qualified donee that is made to support the recipient`s political activities.

The definition of qualified donee is specific, and you can find it on the CRA website. In summary, a qualified donee is an organization that can issue a receipt to a donor, which can be used to reduce the donor's Canadian income tax.

Canadian registered charities make up the majority of qualified donees, but there are other kinds of organizations that are also qualified donees, including a registered Canadian municipality, Her Majesty in right of a province or Canada, the United Nations, and a few other types of organizations.

It is the intent behind the donor charity's giving of a gift that always decides whether the giving is a political activity, and never how the gift is used by the recipient.

For example, a charity may give a $5,000 gift to another Canadian registered charity. The donor charity tells the recipient charity that $2,000 of the gift is intended to support the recipient charity's political activities.

Regardless of what the recipient does with the money, the $2,000 part of the gift is always a political activity for the donor charity, and reported as such on its annual information return—it doesn't matter if the recipient uses all of the gift for political activities, uses none of it for political activities, or never uses any of the gift at all. The donor charity must report the $2,000 as an expenditure on political activities in all the appropriate sections of its Form T3010, Registered Charity Information Return.

Slide 6:

In this section, we will discuss the difference between charitable activities and political activities.

The words activity and purpose are important ones for the CRA.

Generally, a purpose is an aim or goal of an organization. An activity is how it accomplishes that aim or goal, the steps it takes.

Under Canadian law, a charitable activity is generally an activity that directly furthers a charitable purpose.

A charitable purpose is a purpose that falls under one of the four categories of charitable purposes identified by the courts: relief of poverty, advancement of education, advancement of religion, and a final, fourth category that includes charitable purposes such as relief of conditions associated with aging, protection of the environment, and the promotion of health.

To be registered as a charity under the Income Tax Act, an organization must only have charitable purposes.

To pick a relatively straightforward example, a food bank might be registered as a charity. Its charitable purpose would likely be something along the lines of relieving poverty by distributing food to those in need.

Its charitable activities would probably be to lease or rent a building, collect donations of money and food, recruit volunteers and hire staff, and distribute the food to those in need.

Slide 7:

A political activity is any activity that meets the definition of a political activity in the CRA's policy on political activities, CPS-022 (with one exception, making representations to government, as described in section 7.3 of CPS-022).

Some charities have argued that because an activity that meets the definition of a political activity will have a highly beneficial result, or is particularly necessary or urgent, it must therefore be charitable, rather than political.

However, the Canada Revenue Agency considers any activity that fits the description of any of the four types of political activities to be a political activity, however beneficial the results of the activity might be, or how sincere the beliefs of the charity.

For example, a charity is registered to provide relief of the conditions associated with aging, by providing services and facilities aimed at seniors who need help. The charity learns the city plans to cut bus service, and these cuts will eliminate a number of routes many seniors depend on to travel within the city. The charity undertakes a political activity to put public pressure on the city council to reverse the cuts.

The charity might very reasonably see their political activity to try to reverse the decision as one that is critical to health and lives of a number of seniors. They might therefore assume this activity not as a political activity, subject to the limits in the Income Tax Act, but as activities that ultimately protect people's lives and health, and that therefore must be charitable.

However, while the activity is clearly connected to the charity's purpose, because it meets the description of a political activity, it is not charitable, and the use of the charity's resources for this political activity must comply with the limits in the Income Tax Act.

Slide 8:

I'd like to turn briefly to the issue of political purposes. This is an important issue to address, since charities can carry out a limited amount of non-partisan political activities, but they are always prohibited from having a political purpose.

A political purpose is any purpose that seeks to either:

1. further the interests of a particular political party; or support a political party or candidate for public office; or
2. retain, oppose, or change the law, policy, or decision of any level of government in Canada or a foreign country.

A charity must always have only charitable purposes. If a charity adopted a political purpose, it would no longer have only charitable purposes, and would therefore no longer be eligible for registration as a charity.

There are a number of situations in which a charity might be considered to have a political purpose.

A charity can never include in its governing documents a purpose that seeks to retain, change, or oppose the law, policy, or decision of any level of government, in Canada or abroad. (A charity's governing documents are the documents that formally establish an organization and govern its operations, such as a certificate of incorporation or letters patent.)

Slide 9:

If a charity carries out political activities to the extent that they exceed the allowable limits under the Income Tax Act, it's possible the CRA might conclude the charity has adopted a political purpose, even if there is no political purpose explicitly included in its governing documents.

Such an unstated political purpose would normally be discovered by a close examination of a charity's activities, what it is actually devoting its resources to.

For example, if a charity devoted half of its total resources to political activities, this would be a strong indicator that the charity had adopted a political purpose.

Also, some purposes in a charity's governing documents may not explicitly state they are trying to change a law, but describe a goal that can reasonably only be achieved through a change in law.

In such a case, the purpose would very likely be considered a political purpose.

For example, an organization might apply for registration as a charity with the purpose of protecting people`s health by banning a substance or chemical from use in processed food.

This purpose does not clearly call for a change in law, but to accomplish this purpose would require changes in government regulations. The organization would therefore likely be considered to have a political purpose, and could not be registered as a charity.

Generally, any purpose that suggests convincing or needing people to act in a certain way and which depends on a change to law or government policy (for example, "the abolition of" or "the total suppression of" a particular practice) is typically a political purpose, and not acceptable for a charity.