Charities offered tight guidelines for political activity – interpretation of Tax Act
OTTAWA — Charities engaged in activities to inform public opinion.
* must present issues “in an informative, accurate and well reasoned way”;
* must be non-partisan; and
* must be “connected and subordinate to the charity’s purpose,” according to the draft paper on political activities issued by Canada Customs and Revenue Agency.
The circular offers tight guidelines on allowable political activities and spending limits for registered charities. At the same time the courts, the circular points out, would continue to be involved in determining whether a political purpose met the standard of a public benefit or accepted good, which in turn means taking sides in a political debate–the purview of an elected parliament.
Even though the CCRA recognizes the valuable role of charities and their expertise, limits still exist governing political activities and how much annually a charity is able to spend without fear of revocation of their status.
The draft circular is being circulated for public consultation until March 31, 2003. The draft is a response to concerns expressed by the charitable sector that the current interpretation of the Canada Tax Act regarding political activity and advocacy by charities was “unduly restrictive and did not allow a registered charity to inform the public about issues of concern or to participate adequately in the public policy development process.”
The draft is based on the Canada Tax Act, subsections 149.1(6.1) and 149.1(6.2), case law and discussions within government and the volunteer sector.
The document clearly states that a charity cannot be established:
* to further or oppose the interest of a political party or a candidate for political office.
* to retain, oppose or change the law or policy decisions of any government, in Canada or abroad.
How much of a charities resources–monies, staff, volunteers, directors, premises and equipment–may be spent on political activities? Generally, not more than ten per cent annually may be spent for allowable political activities.
However, some administrative concessions are made to smaller charities. A charity with an annual income of:
* $50,000 can spend up to 20 per cent of its resources on political activities in the current tax year;
* $50,000 to $100,000 may spend up to 15 per cent on political activities in the current year. $100,000 to $200,000 in the previous year may spend 12 per cent of its resources in the current year.
Charities may exceed the amount spent on allowable political activities in one year:
* for a unique, one-time activity such as a one-page national print advertisement; and
* may use an unclaimed portion of resources for political activities but never spent on those activities for up to two preceding years.
Allowable political activities may include:
* public workshops and conferences;
* advertising or publicizing materials or documents prepared by the charity on issues affecting its purpose.
However, presentations by the charity must not be inflammatory and have to address all sides of an issue “with serious arguments and relevant facts to the contrary.”
CCRA continues to maintain the current rule that it is acceptable for a charity to make a representation to elected officials, public officials or policy makers, whether invited or not, regarding policy changes or retention. A charity may advocate for changing of laws if it is within the context of presenting views to elected officials, and those views are deemed to be well reasoned. A charity sponsored election forum must give each candidate an equal footing and opportunity.
Finally, charities may organize demonstrations to gain support for its views on a public policy issue, as long as it is a lawful activity, adheres to the financial test of substantially all of its resources being used for the charity’s stated purposes, and it is connected to and subordinate to that purpose.
In all political activities information must be provided to the public, such as telephone numbers or web site addresses, where they might find the charity’s complete, well-reasoned document regarding the issue.
COPYRIGHT 2003 Community Action Publishers
COPYRIGHT 2003 Gale Group
