Just as the Federal Budget spends $8 million to increase the burdens on charities to prove they are staying away from political activities, the oil industry is trying to get Environmental Defence's charitable registration revoked. The lobby group that calls itself Ethical Oil has launched a formal complaint with the federal Canada Revenue Agency alleging Environmental Defence is in violation of its charitable activity requirements, because of its active campaign against pollution caused by the tar sands (oil sands to its friends).
Given the vociferous objections already expressed by federal cabinet ministers about environmental groups that hold up their favourite projects, like Northern Gateway, Environmental Defence may get a rough ride. In its section labelled "Sustainable Social Programs and a Secure Retirement" the Budget says: "Economic Action Plan 2012 proposes measures to ensure that charities devote their resources primarily to charitable, rather than political, activities, and to enhance public transparency and accountability in this area."
The Government of Canada provides registered charities with generous assistance under the tax system in recognition of the valuable work that they perform. Registered charities are exempt from tax on their income and may issue official donation receipts for gifts received. In turn, donors can use those receipts to reduce their taxes by claiming the Charitable Donations Tax Credit (for individuals) or Charitable Donations Tax Deduction (for corporations). In 2011, federal tax assistance for the charitable sector was approximately $2.9 billion. At the request of the government, the House of Commons Standing Committee on Finance is studying current and proposed incentives for charitable giving to ensure the tax incentives are as effective as possible.
Canadians have shown they are willing to donate generously to support charities, but want to be assured that charities are using their resources appropriately. In this regard, charities are required by law to operate exclusively for charitable purposes and to devote their resources exclusively to charitable activities.
Given their unique perspectives and expertise, it is broadly recognized that charities make a valuable contribution to the development of public policy in Canada. Accordingly, under the Income Tax Act charities may devote a limited amount of their resources to non-partisan political activities that are related to their charitable purposes.
Recently, concerns have been raised that some charities may not be respecting the rules regarding political activities. There have also been calls for greater public transparency related to the political activities of charities, including the extent to which they may be funded by foreign sources.
The Canada Revenue Agency (CRA), as administrator of the tax system, is responsible for ensuring that charities follow the rules. Accordingly, to enhance charities' compliance with the rules with respect to political activities, Economic Action Plan 2012 proposes that the CRA enhance its education and compliance activities with respect to political activities by charities and improve transparency by requiring charities to provide more information on their political activities, including the extent to which these are funded by foreign sources.
These administrative changes will cost $5 million in 2012-13 and $3 million in 2013-14. (LINK?)
It is also proposed that the Income Tax Act be amended to restrict the extent to which charities may fund the political activities of other qualified donees, and to introduce new sanctions for charities that exceed the limits on political activities, or that fail to provide complete and accurate information in relation to any aspect of their annual return.
If the CBC is muzzled by budget cuts, and charities are muzzled or frightened into silence, who will speak up for the environment?
Follow Dianne Saxe on Twitter: www.twitter.com/envirolaw1