Canada Revenue Agency (CRA) national headquarters on 555 MacKenzie Avenue in Ottawa. (Photo: OBERT MADONDO/The Canadian Progressive / Flickr (CC BY-NC-SA 2.0)

Canada Revenue Agency suspends controversial Harper-era audit of charities

By: Obert Madondo |  | Published May 13, 2017, by Charity Files

The federal overseer of charities under Canada’s Income Tax Act developed quite a reputation with its controversial political auditing of environmental charities, social justice groups, foreign aid organizations, and other groups seen as critical to the former Conservative government of Stephen Harper. Last week, the Canada Revenue Agency (CRA) announced that the dictatorship-style scrutiny of Canadian charities’ “political activities” is now a thing of the past.

The suspension followed the submission of a report by a panel of five experts appointed to gather and analyze Canadians’ feedback on the audit. According to the report, numerous people who responded to the consultation stated that the audit had “resulted in a pervasive “chill” on the public policy and advocacy activities of charities”.

“The Panel Report represents a significant milestone in the consultation process we began last year and I thank the Panel for its work,” said Diane Lebouthillier, the Minister of National Revenue, in a statement. “The Government remains committed to clarifying the involvement of the charitable sector in public policy dialogue and development.”

The panel’s report recognizes the CRA’s important role of auditing charities to prevent the abuse of Canadian charity status.

RELATED: CRA seeks Canadians’ feedback on its controversial auditing of charities’ political activities

The controversial audits, launched in 2012, were conducted “under an $8-million program that initially targeted environmental groups, then expanded to human rights, poverty, religious and other charities,” according to CBC News.

Canadian Centre for Policy Alternatives

The Canadian Centre for Policy Alternatives (CCPA), a highly-respected left-leaning think-tank, was one of the organizations the CRA recently targeted for scrutiny.

In 2014, more than 420 Canadian academics wrote to the then Minister of National Revenue and arguing that the CRA’s audit of the Ottawa-based think-tank was politically-motivated and “fails to understand the nature of what academic research is all about.”

“The CCPA is an internationally-recognized and respected research centre, built on a solid tradition of critical analysis,” stated the letter. “Indeed, the CCPA plays a vital role by supplying much needed reflection on a number of policies, which it has always done in a fair and unbiased way, and which respects the fundamental tools of sound research.”

The academics also questioned the CRA’s apparent failure to audit conservative think tanks like the Fraser Institute, “whose policy conclusions” were friendlier toward the Harper government’s policies.

After winning the 2015 federal election, Justin Trudeau pledged to end to the controversial audits. In his Ministerial Mandate Letter to Lebouthillier, the prime minister declared that the CRA must allow “charities to do their work on behalf of Canadians free from political harassment.” He wrote that the CRA “exists to serve Canadians” and so should now be overhauled.

Consultation recommendations

During the launch of the consultation process, the CRA  assured us the public’s feedback will lead to “the development of new guidance or educational resources for charities on the rules governing political activities.”

In it’s conclusion, the consultation panel stated that “the characterization of what constitutes ‘political activities’, and the limitations imposed on charities in this regard, impede the sector’s participation in public policy dialogue and development, and do a disservice to Canadians, while offering no offsetting regulatory benefit.” The panel added:

“Our recommendations are intended to reduce the current high level of confusion, uncertainty and cost relating to the regulation of the political activities of charities, and to support their ability to more fully participate in public policy dialogue and development while preserving the CRA’s ability to fulfill its regulatory objectives. We believe that implementing these recommendations will improve the quality of public policy dialogue and development in Canada, as well as reduce administrative complexity and cost for both the sector and its regulators.”

The panel submitted the following four recommendations:

  1. Revise the CRA’s administrative position and policy (including CPS-022, Political Activities) to enable charities to fully participate in public policy dialogue and development.
  2. Implement changes to the CRA’s administration of the ITA provisions governing charities in the following areas: compliance and audits, appeals, and communication and collaboration.
  3. Amend the ITA by deleting any reference to non-partisan political activities to explicitly allow charities to fully engage without limitation in non-partisan public policy dialogue and development, provided that it is subordinate to and furthers their charitable purposes.
  4. Modernize the legislative framework governing the charitable sector.

Storm isn’t over

Meanwhile some targeted organizations such as the CCPA still await closure on their political audit.

“We have devoted four years of resources and finances to defend our right to live up to our charitable mandate,” said CCPA Executive Director Peter Bleyer in a statement. “It is very clear from the consultation panel’s report that this type of targeted auditing needs to be prevented in future.”

In a letter to supporters, Bleyer wrote: “We’re still working to replenish our resources, and we haven’t yet received direct confirmation that the CCPA’s audit, which has been ongoing since 2013, is being suspended.”

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Obert Madondo is an Ottawa-based progressive blogger, and the founder and editor of The Canadian Progressive. Follow him on Twitter: @Obiemad

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Obert Madondo is an Ottawa-based blogger, activist, photographer, digital rights addict, and former international development administrator. He's the founder and editor of these blogs: The Canadian Progressive, a provocative and activism-oriented Canadian political blog; Zimbabwean Progressive, an independent blog dedicated to producing fearless, progressive, adversarial, unapologetic, and activism-oriented political journalism; and Charity Files, a publication dedicated to journalism in the giving public's interest.