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The International Journal
of Not-for-Profit Law

Volume 6, Issue 2, February 2004

A publication of the International Center for Not-for-Profit Law

Table of Contents

Letter from the Editor

The Pacific

Social Inclusion and the Indigenous People of Australia: Achieving a Better Fit Between Social Need and the Charity Law Framework
Kerry O'Halloran

Australia Crawls Closer to Reform of the Definition of Charity
Myles McGregor-Lowndes

Consultations Toward Legal Reform in Tuvalu
James Duckworth and Mose Saitala

Social Capital and Philanthropy in Maori Society
Tuwhakairiora Williams and David Robinson

The Challenges Facing American Nonprofits

Deterring Donors: Anti-Terrorist Financing Rules and American Philanthropy
Barnett F. Baron

A Needless Silence: American Nonprofits and the Right to Lobby
Jeffrey M. Berry

The Nonprofit Paradox: For-Profit Business Models in the Third Sector
Bill E. Landsberg

Articles

Survival Strategies for Civil Society Organizations in China
Julia Greenwood Bentley

An Introduction to Canadian Tax Treatment of the Third Sector
Robert Hayhoe

"Organized" Civil Society and Its Limits
Antonio Itriago and Miguel Angel Itriago

The Fiscal Framework for Corporate Philanthropy in CEE and NIS
David Moore

Defining Characteristics of Civil Society
Timothy J. Peterson and Jon Van Til

The Alchemy of Success: The Case of Corporate Responsibility
Simon Zadek

Civil Society at the Movies
Rod Smolla

Reviews

The Civil Society Reader
Edited by Virginia A. Hodgkinson and Michael W. Foley
Reviewed by Morgan Meis

The Perfect Gift: The Philanthropic Imagination in
Poetry and Prose
Edited by Amy A. Kass

Does Civil Society Matter?: Governance in Contemporary India
Edited by Rajesh Tandon and Ranjita Mohanty

The State of Civil Society in Japan
Edited by Frank J. Schwartz and Susan J. Pharr

Paved With Good Intentions: The NGO Experience in North Korea
Edited by L. Gordon Flake and Scott Snyder

The Legal and Regulatory Framework for CSO Self-Financing in Colombia;
The Legal and Regulatory Framework for CSO Self-Financing in Chile
By Nicole Etchart, Brian Milder, Maria Cecilia Jara, and Lee Davis

- - - - - - - - - -

Editorial Board

An Introduction to Canadian Tax Treatment of the Third Sector

By Robert B. Hayhoe*

Introduction

This article provides an introduction to Canadian income taxation[1] of the voluntary (or third) sector. It assumes no knowledge of the Canadian tax rules for the third sector or even the general Canadian legal system. Given the length constraints, it deals with the subject on a conceptual level and provides neither the detail necessary for practicing in the area nor the fully formed policy explanation necessary for a proper academic analysis, though I do other literature where readers can find such practical and policy background.

To reach a general understanding of the voluntary sector's income tax treatment in a jurisdiction, one must address just two questions: Does tax apply to the organization? Do donations to the organization by other taxpayers give rise to any tax benefit for the donors? In a federal state, it is also necessary to consider a third question: Which level of government taxes and regulates participants in the sector? This article addresses all three questions in the Canadian context.

As a legal matter, the provinces hold the constitutional authority to regulate charities in Canada. As a practical matter, though, Canadian regulation of charities is largely federal and carried out through the Income Tax Act.[2] This article provides an overview of this division of power. It also shows that most third-sector organizations are exempt from income tax in Canada, though only donations to organizations that meet the common law legal definition of "charity" generally give rise to a tax benefit.

Constitutional Analysis

Canada is a federal state with a federal parliament and ten provinces,[3] each with its own legislature.[4] The written Canadian Constitution[5] divides legislative authority and competence between the provinces and the federal government by listing their respective areas of competency.[6]

Under the Constitution, the provinces have exclusive jurisdiction over "Hospitals, Asylums, Charities, and Eleemosynary Institutions," all of which can be classified as charities[7] at common law.[8] Although the power to regulate charities is provincial, only in the province of Ontario[9] does the Attorney General make any consistent effort to exercise this power (through the office of the Public Guardian and Trustee[10] ). Because of this practical abdication of provincial responsibility, the de facto regulator of the voluntary sector in Canada is the federal Canada Customs and Revenue Agency, which regulates charities through the income tax system.[11]

Given the constitutional division of powers, it is necessary to consider whether the de facto regulation of the voluntary sector through the tax system is constitutionally proper. Although no court has ever considered the specific issue, it is likely that the federal tax system's treatment of the voluntary sector would be found to be intra vires, provided that the purpose of the tax system is taxation and not regulation.[12] This would require a court to accept that the regulation of charities pursuant to the Act seeks to administer the tax exemption for charities and the tax recognition of donations, rather than to regulate behavior per se.

Having provided this brief constitutional discussion, I now turn to the specific tax questions raised in the introduction.

Tax Exemption of Third-Sector Organizations

The Act provides an exemption from Part I income tax[13] for a number of different participants in the voluntary sector. These tax-exempt entities include governments and such quasi-governmental organizations as municipal authorities[14] and corporations owned by a federal, provincial, or municipal government,[15] as well as various specific types of voluntary-sector organizations, including agricultural organizations, boards of trade and chambers of commerce,[16] homes for the aged,[17] nonprofit scientific research corporations,[18] labor organizations,[19] and mutual insurance corporations.[20] The Act provides that "no tax is payable under this Part on the taxable income of a person for a period when that person was" one of the above-listed organizations.[21]

Two categories of third-sector organizations deserve more detailed treatment. The first is a "nonprofit organization," exempted from income tax by paragraph 149(1)(l):

149. (1) No tax is payable under this Part on the taxable income of a person for a period when that person was…

Nonprofit organizations

(l) a club, society or association that, in the opinion of the Minister, was not a charity within the meaning assigned by subsection 149.1(1) and that was organized and operated exclusively for social welfare, civic improvement, pleasure or recreation or for any other purpose except profit, no part of the income of which was payable to, or was otherwise available for the personal benefit of, any proprietor, member or shareholder thereof unless the proprietor, member or shareholder was a club, society or association the primary purpose and function of which was the promotion of amateur athletics in Canada....

The above definition constitutes virtually the entire legislative tax system for nonprofit organizations. As can be imagined, basing the entire tax regulation of nonprofit organizations on such a short definition leaves a number of issues for judicial determination. Many articles describe the Canadian tax treatment of nonprofit organizations.[22] Here I only identify some of the conceptual issues that might interest an audience not made up of Canadian lawyers or academics.

Pursuant to 149(1)(l) set out above, a nonprofit organization is tax exempt only if it is a club, society, or association. Courts have held that these terms are not to be given a technical meaning; an organization with virtually any legal form can qualify as a nonprofit organization.[23] More important, the definition of a nonprofit organization explicitly excludes charities, defined elsewhere in the Income Tax Act as organizations with exclusively charitable purposes or activities.[24] The definition of charity, which will be discussed below, is essentially a common law test.[25]

The definition of "nonprofit organization" goes on to list various approved nonprofit purposes, but all can be subsumed under the basket clause of "any other purpose except profit." Furthermore, in order to meet the definition of a nonprofit organization in the Income Tax Act, the organization must not make any of its income available to its members. The nonprofit and non-distribution requirements, based as they are on very general statutory language, have resulted in relatively extensive litigation as the Canada Customs and Revenue Agency has challenged the tax exemption of nonprofit organizations, which have been obliged to appeal to court to establish their tax exemption.[26] These challenges arise most frequently for organizations that earn a profit but argue that profit was not their purpose in carrying on the profitable activity.

Tax Exemption of Registered Charities

The Act also provides a specific tax exemption for a "registered charity."[27] Subsection 248(1) defines a registered charity as "a charitable organization, private foundation or public foundation ... that has applied to the Minister in prescribed form for registration and that is at that time registered." Thus, only a charity registered with the Canada Customs and Revenue Agency is exempt from Part I income tax under this provision. We have previously seen that the other third-sector income tax exemption of general application, the exemption for "nonprofit organizations,"[28] applies only to organizations that do not have exclusively charitable purposes or activities.[29]

Thus, an organization that is charitable at law but not a registered charity is not provided with a specific exemption from Part I income tax. As a result, it is at least arguable that unregistered charities are taxable under the Act.[30] I will not discuss in detail how their income should be calculated, but it is possible that the income of an unregistered charity could include annual surplus from operations or even all revenue.[31] One might argue that income from charitable operations is not income from a source that is taxable pursuant to Part I of the Act,[32] but this article does will not provide a detailed analysis of this argument.

Registration of Unregistered Charities

In one sense, the obvious solution to the difficulty of an unregistered charity's being taxable would be to seek to register the charity. Although this would involve additional recordkeeping requirements and Canada Customs and Revenue Agency filings,[33] these duties should be manageable in most cases. However, subsection 149(10) provides that when an corporation becomes exempt under section 149 (which includes the paragraph dealing with the tax-exempt status of a registered charity), the corporation is deemed to have disposed of all of its property for fair market value, thereby triggering any accrued capital gain and the possibility of a resulting tax liability. There is no parallel provision for organizations not organized as corporations, so there does not appear to be any comparable issue facing a charitable trust or an unincorporated charitable association that registers.[34]

Though a charity that grants donation receipts[35] is required to register in order to prevent tax evasion by donors, the policy reasons for treating an unregistered charity as a taxable entity are less clear. This is particularly so because a nonprofit organization (which by definition pursues objects less beneficial to the public at large than those of the unregistered charity) need not register, has similarly lax tax reporting requirements,[36] but is not taxable. An unregistered charity that disposes of its property should not be required to apply for a remission order[37] in order to avoid tax on the resulting capital gain.

Maintenance of Registration

The registration of a charity is not permanent, but is subject to continued compliance with provisions of the Act. These provisions raise definitional issues: the charity must continue to devote its activities to its charitable purposes. The provisions also include technical requirements: certain types of registered charities must not incur debt,[38] for instance, and registered charities must expend certain portions of their income on current charitable activities.[39] These relatively complicated requirements are beyond the scope of this article.[40]

A registered charity that no longer meets the qualifications in the Act for registration (because the charity either changes the scope of its activities or commits an administrative error) is subject to having its registration revoked by the Canada Customs and Revenue Agency.[41] Pursuant to the Act,[42] revocation of registration results in the automatic application of a tax equal to the value of the assets of the registered charity. Although this seems draconian, the Canada Customs and Revenue Agency is loath to revoke registration even when the Act would permit it to do so. Essentially, revocation of registration is imposed only when the defaulting charity has engaged in outrageous behavior (for example, fraud) or the charity continues to engage in serious misconduct after having been warned. Furthermore, the Act provides that the revocation tax may be avoided to the extent that the charity makes grants to registered charities within the year following revocation.[43] As a result, even in the rare occasions when a charity's registration is revoked, the revocation tax virtually never applies.

In Canada, unlike some other jurisdictions,[44] revocation of registration is the only penalty for most non-compliance by a registered charity.[45] This lack of intermediate sanctions is a serious problem both for charities and for the Canada Customs and Revenue Agency. Canada Customs and Revenue Agency staff understandably may believe that they have little power to ensure compliance because of their reluctance to impose what is essentially capital punishment by revoking the registration of a registered charity and taxing away all of its assets. At the same time, every registered charity must operate with the knowledge that the smallest breach of the technical rules in the Act could result in revocation of its registration. Pending proposals call for developing an intermediate sanctions system of taxes or penalties.[46]

Definition of Charity

An organization is eligible to register as a charity only if it has charitable purposes. The definition of charity in Canada is a common law one, based on the 19th century English decision known as Lord Pemsel's case,[47] which itself relied upon a 1601 English statute known colloquially as the Statute of Elizabeth.[48] Lord Pemsel's case held that charitable objects could be classified into four "heads" or categories: the relief of poverty, the advancement of religion, the advancement of education, and other purposes of a charitable nature beneficial to the community as a whole.[49] Many textbooks[50] and articles[51] and a significant amount of jurisprudence[52] discuss whether particular purposes or activities qualify as charitable at law. Nonetheless, substantial uncertainty remains with respect to the charitable status of a number of relatively common third-sector purposes and activities.

At present, the most significant issue arising out of this definition of charity in Canada concerns the political purposes doctrine. Under both the common law of charity[53] and the Income Tax Act,[54] an organization with exclusively charitable purposes that is a registered charity must not engage in political activity. Though this distinction is sometimes obvious (for example, it is clear that a registered charity must not engage in partisan election politics), it is less clear in other cases. The dividing line between the permitted charitable purpose of advancing education and the forbidden political purpose of advocacy can be difficult to draw. There is currently significant agitation in the Canadian voluntary sector in favor of letting advocacy organizations register as charities.[55] This would provide tax benefits to these organizations' donors; the advocacy organizations themselves, as nonprofits, are already tax exempt.[56]

Donations

I turn now to the issue of what donations provide tax benefits to the donor. The Act treats corporate taxpayers and individual taxpayers differently. It lets a corporate taxpayer deduct[57] up to 75 percent of its income for donations to organizations described in the Act as qualified donees.[58]

Similarly, the Act provides a tax credit[59] for individuals who donate to qualified donees.[60] (The list of qualified donees is the same for both individuals and corporations.) For up to 75 percent of the individual's income for the year, this tax credit provides tax recognition equivalent to the middle marginal rate for gifts up to $200 per taxpayer per year, and equal to the top marginal rate for gifts above $200 per year. Thus, for individual taxpayers who do not earn income at the top marginal rate, the tax credit provides an incentive beyond a mere deduction from income.

Definition of Qualified Donee

Registered Charities

The first and most important type of qualified donee is a registered charity. In order to register, a charity must both be a Canadian resident and have been created or established in Canada.[61] This essentially means that foreign charities cannot register as Canadian charities and thus become qualified donees. They can, however, help form new Canadian charities which are qualified donees and which can work with the related foreign charity to achieve charitable purposes.[62]

Registered Canadian Amateur Athletic Associations

Registered Canadian amateur athletic associations are nonprofit organizations devoted to the promotion of sports throughout Canada.[63] These generally support high-level "amateur" sports in Canada, although they may also support more traditional, recreational amateur sports in Canada.[64]

Governmental Bodies

The Canadian federal government, Canadian provincial governments, and Canadian municipalities[65] are qualified donees, as are agencies of these government entities. The United Nations and its agencies are also listed as qualified donees. Whether a particular United Nations entity qualifies as a U.N. "agency" may pose a difficult question, given that U.N. entities may not meet the ordinary common law test for agency.[66]

Foreign Universities

A university outside Canada that enrolls students from Canada is a qualified donee. The Canada Customs and Revenue Agency maintains a list of universities customarily attended by Canadians.[67] The regulation currently lists universities in the United States, the United Kingdom, Austria, Belgium, Switzerland, Israel, Lebanon, the Republic of Ireland, Germany, Poland, Spain, the People's Republic of China, Jamaica, the Czech and Slovak Republics, Australia, Croatia, South Africa, the Netherlands, Hong Kong, and New Zealand. The Canada Customs and Revenue Agency is willing to expand this list through an informal application process.

Foreign Charities with Canadian Government Patronage

The last qualified donee is a foreign charity that has received a gift from the Canadian federal government within the past year. The Canada Customs and Revenue Agency takes a very narrow view[68] of what constitutes a gift from the Canadian federal government. The agency's list varies from year to year but usually contains only a handful of names.[69]

Conclusion

As described above, the Canadian tax system generally provides that most voluntary-sector organizations in Canada are exempt from tax under the Income Tax Act, with the exception of charities that have not applied to register. However, only organizations that are qualified donees, primarily registered charities, can issue the receipts necessary for donors to obtain tax recognition for donations. This represents a desire by Canada to retain control over the tax benefits that it provides for donations.

Notes

*   Robert Hayhoe, B.A. ( Trinity College, University of Toronto), LL.B. ( University of British Columbia), LL.M. (Osgoode Hall Law School of York University), is a tax lawyer with the firm Miller Thomson LLP in Toronto, Canada. He specializes in advising charities and other participants in the third sector. Copyright 2004 by Robert Hayhoe.

[1]     I do not address the application of Canada's value-added tax, the GST, to the sector. For information, see the GST legislation, the Excise Tax Act, R.S.C. 1985, c. E-15, or one of the articles on the subject: Peter H. Wood, "The GST: Charities and Other Nonprofit Organizations," in Report of Proceedings of the Forty-Third Tax Conference, 1991 Conference Report (Toronto: Canadian Tax Foundation, 1992), 30:1-53; or Ronald C. Knechtel, "Compliance Issues in Operating Charities," Report of Proceedings of Forty-Ninth Tax Conference, 1997 Tax Conference (Toronto: Canadian Tax Foundation, 1998), 28:1-24.

[2]     R.S.C. 1985 C.1 (5th Supp.), as amended (herein referred to as the "Act"). Unless otherwise stated, statutory references here are to the Act.

[3]     Ignoring for the moment the three Arctic territories: the Yukon Territory, the Northwest Territory, and Nunavut.

[4]     The territories also have legislative councils, but these are not constitutionally protected, but mere creatures of federal statute with only delegated authority. Northwest Territories Act, R.S.C. 1985, c. N-27 or Yukon Act, R.S.C. 1985, c.Y-2 or Nunavut Act, S.C. 1993, c.28.

[5]     Constitution Acts, 1867 to 1982.

[6]     Section 91 of the Constitution Act, 1867, 30 & 31 Victoria, c. 3. ( U.K.) lists the federal legislative powers, and section 92 lists the provincial powers.

[7]     See notes 47-56 and accompanying text.

[8]     Section 92 of the Constitution Act, 1867 provides as follows:

92. In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subjects next hereinafter enumerated; that is to say, …

7. The Establishment, Maintenance, and Management of Hospitals, Asylums, Charities, and Eleemosynary Institutions in and for the Province, other than Marine Hospitals.

Because the federal government (on the majority view; see Peter Hogg, Constitutional Law of Canada [ Toronto: Carswell, looseleaf] at 17.1) has residuary power under its power to make laws for the peace, order, and good government of Canada, it has the power to regulate charities in the territories.

[9]     In addition, some other provinces have specific legislation that regulates fundraising.

[10]    For example, see Rachel Blumenfeld, "Case Comment: Ontario (Public Guardian and Trustee) v. AIDS Society for Children ( Ontario) (2001), 39 E.T.R. (2d) 96".

[11]    Assume for the purposes of this article that the federal government has a plenary power to tax throughout Canada. For a fuller discussion of the division of taxing authority, see Joseph E. Magnet, "The Constitutional Distribution of Taxation Powers in Canada," (1978) 10 Ottawa Law Review 473; and G.V. La Forest, The Allocation of Taxing Power under the Canadian Constitution, 2nd ed. (Toronto: Canadian Tax Foundation, 1981).

[12]    See Hogg, supra note 8 at 30.13(c).

[13]    Part I of the Act imposes a general income tax on income of a person from a source. Although various other parts to the Act impose various other taxes, organizations that are exempt from Part I tax are generally exempt from taxes under these other parts. For example, the Part I.3 Large Corporation Tax is not applicable by virtue of paragraph 181.1(3)(c). Similarly, subsection 212(14) provides an exemption from the withholding tax that would otherwise be imposed on a foreign nonprofit organization earning income from Canada (provided that the organization is tax exempt in its home jurisdiction) as does subsection 219(2) from Part XIV tax on non-resident corporations. Finally, subsection 227(14) provides exemption pursuant to Parts IV, IV.1, VI, and VI.1.

[14]    Paragraph 149(1)(c).

[15]    Paragraphs 149(1)(d) – (d.6).

[16]    Paragraph 149(1)(e).

[17]    Paragraph 149(1)(I).

[18]    Paragraph 149(1)(j)

[19]    Paragraph 149(1)(k)

[20]    Paragraph 149(1)(m)

[21]    Subsection 149(1)

[22]    See Ronald C. Knechtel, "Tax Treatment of Nonprofit Organizations," in Report of Proceedings of the Forty-first Tax Conference, 1990 Conference Report (Toronto: Canadian Tax Foundation, 1991), 35:1 at 35:16; Arthur Drache, "Charities, Nonprofits and Business Activities," Report of Proceedings of the 49th Tax Conference, 1997 Tax Conference (Toronto: Canadian Tax Foundation, 1998), 30; and Arthur Drache, Canadian Taxation of Charities and Donations (Toronto: Carswell, looseleaf) (hereinafter "Drache Looseleaf") at 15-1. I have recently prepared an updated detailed outline of this area (submitted to The Philanthropist for publication as "An (Updated) Introduction to the Taxation of Nonprofit Organizations"). This article is based on a presentation made in May 2001 as part of a seminar sponsored by the Charities and Not-For-Profit Section of the Canadian Bar Association–Ontario entitled "The ABCs of NPO's: Getting Oriented in the World of Not-For-Profit."

[23]    A corporation with share capital (St. Catharines Flying School Ltd. v. M.N.R., 53 D.T.C. 1232 ( Ex. Ct.)); a partnership (M.N.R. v. Begin, 62 D.T.C. 1099 ( Ex. Ct.)); a trust (L.I.U.N.A. Local 27 v. M.N.R., 92 D.T.C. 2365 (T.C.C.)).

[24]    Subsection 149.1(1): "charity," "charitable organization" and "charitable foundation."

[25]    See notes 47-56 and accompanying text.

[26]    See the materials cited at note 22 for a full discussion of this complicated and confusing area of jurisprudence.

[27]    Paragraph 149(1)(f).

[28]    Paragraph 149(1)(l).

[29]    See notes 47-56 and accompanying text.

[30]    Revenue Canada Technical Interpretations have come to this conclusion on many occasions: E.g., Revenue Canada document no. 9333965 (26 April, 1994); document no. 9305505 (15 June, 1993). Similarly, see J.J. Coombs, Charities and Charitable Donations (Don Mills: CCH Canadian Limited, 1978) at paragraph 624; Knechtel, supra note 20 at 35.3.

[31]    Would an unregistered charity be able to deduct its expenses, as they would arguably not have been incurred to earn income?

[32]    See Schwartz v. Canada [1996] 1 S.C.R. 254.

[33]    The recordkeeping requirements imposed on registered charities by section 230 of the Act and Income Tax Regulation 5800 are more extensive than those that apply to, for example, nonprofit organizations. Furthermore, the T3010 Information Return that is required to be filed annually by all registered charities is much more detailed than the T1044 form which is required to be completed by nonprofit organizations .

[34]    Knechtel, supra note 22 at 35:16.

[35]    See the discussion at notes 61-62 and accompanying text.

[36]    See note 33.

[37]    A mechanism whereby the federal government, pursuant to section 23 of the Financial Administration Act, R.S.C. 1985, c. F-11, may forgive tax that is legally required to be paid. See H. Arnold Sherman and Jeffrey D. Sherman, "Income Tax Remission Orders: The Tax Planners' Last Resort or the Ultimate Weapon?" (1986) 34 C.T.J. 801.

[38]    Pursuant to subsections 149.1(3) and 149.1(4), registered charities that are classified as public and private foundations (as opposed to charitable organizations) must not incur debts other than for certain listed purposes.

[39]    Subsection 149.1(1) "disbursement quota."

[40]    See Drache Looseleaf, supra note 22.

[41]    Pursuant to subsections 149.1(3) – 149.1(5).

[42]    Section 188.

[43]    Section 188.

[44]    For example, the United States

[45]    The one exception is the tax imposed by section 189 on private foundations that lend money to controlling donors at less than market interest rates.

[46]    For example, the voluntary-sector initiative (a joint research, policy, and advocacy project of the voluntary sector and the federal government) is proposing that a system intermediate sanctions be developed.

[47]    Pemsel v. Special Commissioners of Income Tax, 3 T.C.53, [1891] A.C. 531, [1981-94].All E.R. Rep. 28 (HL).

[48]    An Acte to Redress the Misemployment of Landes, Goodes and Stockes of Money heretofore Given to Charitable Uses, 43 Elizabeth I, c. 4.

[49]    The meaning of the first three heads is generally obvious, but the scope of the fourth head, purposes of a charitable nature beneficial to the community as a whole, is not. This fourth head is not a catchall provision for beneficial purposes; it refers only to an assortment of purposes that past common law decisions have viewed as charitable, such as environmental protection.

[50]    For example, see two English texts, Hubert Picarda, The Law and Practice Relating to Charities, 3rd ed. (London: Butterworths, 1999); and O. Tudor, Law of Charities, 8th ed.(1995); or a Canadian text, Donald Bourgeois, The Law of Charitable and Nonprofit Organizations, 2nd ed. (Toronto, Butterworths, 1995).

[51]    There is no seminal Canadian article. However, see past issues of The Philanthropist for various articles on the subject.

[52]    The most recent decision of the Supreme Court of Canada is Vancouver Society of Immigrant and Visible Minority Women v. M.N.R., 99 D.T.C. 5034.

[53]    See Picarda, supra note 50 at chapter 14.

[54]    Subsection 149.1(6.1)

[55]    For example, the website of the Institute for Media, Policy and Civil Society presents forcefully the partisan view that advocacy by charities should be encouraged. The limitations on advocacy by registered charities are also criticized by the Voluntary Sector Initiative.

[56]    See notes 61-62 and accompanying text.

[57]    Subsection 110.1(1).

[58]    Subsection 248(1) "qualified donee."

[59]    See Robin Boadway and Harry Kitchen, Canadian Tax Policy, 3rd ed. (Toronto: Canadian Tax Foundation, 1999) at 126 for a description of the tax credit mechanism.

[60]    Subsection 118.1(1).

[61]    Subsection 248(1) "registered charity"

[62]    See Robert Hayhoe, "A Critical Description of the Canadian Tax Treatment of Cross-Border Charitable Giving and Activities," (2001) 49 Canadian Tax Journal 320 (hereinafter "Hayhoe Critical") for a detailed policy analysis; or David Amy, "Foreign Activities by Canadian Charities" (2000) 15:3, The Philanthropist 41, for a practical outline of such structures.

[63]    Subsection 248(1) "registered Canadian amateur athletic association."

[64]    Maccabi Canada v. M.N.R. 98 D.T.C. 6526 (F.C.A.).

[65]    This may include native Indian bands that exercise some of the powers of a municipality in their local area. Otineka Development Corporation Limited and 72902 Manitoba Limited v. The Queen, 94 D.T.C. 1234 (T.C.C.).

[66]    I have previously argued that common law tests for agency are inappropriate in the circumstances. Hayhoe Critical, supra note 62 at 325.

[67]    Income Tax Regulation Schedule VIII.

[68]    For example, the Canada Customs and Revenue Agency takes the position that foreign development grants made by the Canadian International Development Agency, which is an integral part of the federal government, do not generally constitute gifts from the federal government because reporting conditions are imposed upon them. This is an exceedingly narrow approach, and I have previously argued that it is wrong. Hayhoe Critical, supra note 62 at 327.

[69]   
 
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