The much-anticipated changes to the laws that regulate the political activities of Canadian registered charities have now been made. On December 13, 2018, Bill C-86, Budget Implementation Act, 2018, No. 2, which contained amendments to the political activity rules under the Income Tax Act (Canada) (ITA), received royal assent (Amendments).
As a result of the Amendments, charities can now engage in unlimited public policy dialogue and development activities (Public Policy Activities), so long as these activities further their charitable purpose(s) and do not involve the direct or indirect support of, or opposition to, any political party or candidate for public office.
Historically, there has been a great deal of confusion and uncertainty about the regulation of the political activities of registered charities in Canada, which was the impetus for the Amendments. Based on the Amendments and the Explanatory Notes, the new rules regarding the political activities of Canadian registered charities (which are now called Public Policy Activities) can be summarized as follows:
- Charities must still be created and operated exclusively for charitable purposes.
- Charities can now engage in unlimited non-partisan Public Policy Activities, provided such activities further their “stated” charitable purpose(s).
- Charities still cannot engage in any partisan political activities (i.e., “the direct or indirect support of, or opposition to, any political party or candidate for public office”).
The Amendments apply retroactively to charities that were registered before September 14, 2018 (some becoming effective as far back as January 1, 2008, and others as of June 29, 2012), meaning that they supersede the rules upon which the previous and suspended CRA audits and objections from the Audit Program were based. Otherwise, for charities registered on or after September 14, 2018, the Amendments are deemed to come into force on that date.
The CRA has not yet released new guidance to accompany the Amendments, however, it previously indicated that it plans to do so before the end of 2018. For more information on the Amendments and the forthcoming guidance, please contact your Ally Law lawyer.