An Act to amend the Income Tax Act (revocation of registration)

This bill was last introduced in the 40th Parliament, 3rd Session, which ended in March 2011.

This bill was previously introduced in the 40th Parliament, 2nd Session.


Albina Guarnieri  Liberal

Introduced as a private member’s bill. (These don’t often become law.)


Second reading (House), as of Nov. 3, 2009
(This bill did not become law.)


This is from the published bill. The Library of Parliament often publishes better independent summaries.

This enactment amends the Income Tax Act to revoke the registration of a charitable organization, public foundation or private foundation if the annual compensation it pays to any single executive or employee exceeds $250,000.


All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.


April 21, 2010 Passed That the Bill be now read a second time and referred to the Standing Committee on Finance.

Bill C-317—Income Tax Act—Speaker's RulingPoints of OrderRoutine Proceedings

November 4th, 2011 / 12:10 p.m.
See context


The Speaker Conservative Andrew Scheer

I am now prepared to rule on the point of order raised by the hon. member for Windsor—Tecumseh concerning ways and means proceedings on Bill C-317, An Act to amend the Income Tax Act (labour organizations) standing in the name of the hon. member for South Surrey—White Rock—Cloverdale.

I would like to thank the hon. member for Windsor—Tecumseh for having raised this matter, as well as the bill's sponsor, the hon. member for South Surrey—White Rock—Cloverdale, for their interventions and the hon. member for Kitchener—Conestoga for his comments.

The hon. member for Windsor—Tecumseh pointed out in his remarks that the purpose of Bill C-317 is to require that labour organizations provide specific financial information to the minister for public disclosure. The member also pointed out that failure of a labour organization to comply with this new requirement could result in a labour organization losing its tax exempt status, noting, as well, the subsequent impact this would have on dues-paying members of that organization.

He characterized the effect of Bill C-317 in the Debates, on October 18, 2011, page 2171, as follows:

—the income tax exemptions that apply to labour organizations and the reduction of taxable income as a result of writing off the dues paid by their members would easily qualify as alleviations of taxation. Further, the provisions of Bill C-317 would repeal those alleviations by terminating the labour organization's Income Tax Act exempt status.

The member for Windsor—Tecumseh explained that any labour organization not in compliance with the financial disclosure requirements outlined in the bill would no longer enjoy the tax exempt status as provided for in section 149(1)(k) of the Income tax Act. He argued that this would have the effect of taxing a person, or in this case an organization, that was not already a taxpayer. He concluded therefore that Bill C-317 should have been preceded by the adoption of a ways and means motion.

In his submission, the hon. member for South Surrey—White Rock—Cloverdale in the Debates, on October 25, 2011, page 2438, contended that the purpose of Bill C-317 was limited simply to providing a mechanism for the public disclosure of union finances and only augmented the existing types of information that the Canada Revenue Agency was already empowered by its mandate to compel organizations or taxpayers to provide.

He also referred to a ruling from the 40th Parliament on Bill C-470, An Act to amend the Income Tax Act (revocation of registration). He found a parallel between Bill C-317 and Bill C-470. Where it had been argued that charitable donations were discretionary so that Bill C-470 did not affect any existing alleviation of tax, the hon. member argued that in the case of Bill C-317 payers of union dues could exercise their discretion by opting to join a union or labour organization that adhered to the financial disclosure provisions of Bill C-317 and, thus, maintain the tax exempt status of their dues.

Before analyzing the arguments presented, it is important to take into consideration the context of this discussion as it is worth noting that the financial procedures of the House are based on long-established and strictly observed rules of procedure, procedures that are based on the concept of the financial initiative of the Crown. This concept is clearly presented in Erskine May’s Parliamentary Practice, 23rd edition, at page 848:

—it is for the Commons, acting on the sole initiative of Ministers, first to authorize the relevant expenditure (or 'Supply') and, second, to provide through taxes and other sources of public revenue the 'Ways and Means' deemed necessary to meet the Supply so granted.

The role of the Speaker in the present situation is to determine if Bill C-317 is a legislative initiative which imposes a tax or other charge on the taxpayer and therefore would have required the prior adoption of a ways and means motion by the House.

In order to respond to that question, it may be useful to examine more closely the different precedents cited by the members who intervened on the present case.

During his initial point of order, the member for Windsor—Tecumseh referred the Chair to the ruling of November 28, 2007, on Bill C-418, An Act to amend the Income Tax Act (deductibility of remuneration). In that ruling, at pages 1463 and 1464 of the Debates, the Chair made reference to Erskine May's Parliamentary Practice, 23rd edition at page 896, where it explains, “the repeal or reduction of existing alleviations of taxation” must be preceded by a ways and means motion.

The Chair concluded that Bill C-418 removed an existing tax exemption which then resulted in an increase in the tax payable by certain corporations. In the Chair's view, this constituted a reduction of an alleviation of taxation and therefore required that it be preceded by a ways and means motion. I would ask hon. members to retain the phrase, “alleviation of taxation”, as I will return to that concept shortly.

First, let me address the differing interpretations of how an individual union member’s rights are affected by Bill C-317. The member for Windsor—Tecumseh argued that union members do not have the automatic individual right to stop paying dues to an organization that no longer enjoys a tax exempt status. The member for South Surrey—White Rock—Cloverdale countered that, in his estimation, union members would have the ability to select a labour organization that complies with the provisions of C-317 to ensure that they maintain their tax exemption. While this is more a question of labour law than procedure, the Chair is aware that members of a labour organization cannot easily change which union they belong to nor can they simply withhold paying their union dues except in extremely limited situations provided for in the law. As pointed out by the member for Windsor—Tecumseh, this is in stark contrast to donors to a charity who may choose whether they wish to contribute, the organization they wish to contribute to and the timing of any such contribution.

The Chair must agree with the hon. member for Windsor—Tecumseh that the non-compliance of the labour organization would also remove a current income tax deduction for the dues-paying members of the union. For the Chair, there can be no doubt that this also can be characterized as the removal of an existing alleviation. For this reason alone, Bill C-317 would need to be preceded by a ways and means motion.

Let us return to the larger context. The Chair appreciates the point made by the member for South Surrey—White Rock—Cloverdale that the Canada Revenue Agency already enjoys the authority to compel the financial disclosure of certain financial information. However, it is not the power of the CRA to require the disclosure of certain information that is at issue.

It is true, as the member for South Surrey—White Rock—Cloverdale claims, that Bill C-317 changes the reporting requirements for labour organizations. However, contrary to what the member asserted, that is not all it does. In stating that non-compliance with these new requirements makes a labour organization ineligible for tax deductions available to labour organizations, Bill C-317 potentially removes an alleviation of taxation and in so doing, the bill potentially creates a new statutory authority that removes what is currently an unqualified exemption.

Perhaps the distinction can be better understood by looking again at the example offered by Bill C-470 in the third session of the 40th Parliament. That bill changed the definition of a class of taxpayers, specifically registered charities, but the alleviation of tax for registered charities as a class of taxpayer remained unchanged. By contrast, Bill C-317 does not change the definition of a labour organization. It demands disclosure of certain types of information, failing which disclosure, the bill provides that the tax alleviation in place for labour organizations will no longer apply to non-complying labour organizations.

This is a subtle difference, but it is a crucial distinction for the Chair.

The ruling on Bill C-470 determined that the bill altered the conditions and requirements for an organization to be classified by the minister as a registered charity but did not alter the class of taxpayer. In more basic terms, Bill C-470 proposed to alter the definition of what constituted a registered charity but did not change the tax exemptions for registered charities. In the ruling on C-470, delivered on March 15, 2010, and found on pages 419 and 420 of the Debates, I stated:

It seems to me that the bill instead seeks to provide a new criterion that would allow the minister to determine into which existing class of taxpayer an organization falls. The existing tax regimes and the existing tax rates are not affected.

However, unlike Bill C-470, Bill C-317 does not attempt to alter the conditions or requirements for an organization to be classified as a labour organization.

According to the provisions of Bill C-317, under the Income Tax Act, a labour organization would remain a labour organization, whether it complied with the proposed disclosure requirements or not. If enacted, Bill C-317 would thus create a situation whereby labour organizations can be differentiated into two distinct categories, those that comply with the financial reporting mechanism and those that do not.

In the Chair's opinion, this new category of labour organization would constitute a class of taxpayer that does not currently exist. Labour organizations in the newly created class, that is those that do not meet the financial reporting requirements outlined in the bill, would see the removal of their current tax-exempt status. Put simply, Bill C-470 did not alter the tax-exempt status of registered charities, whereas, in contrast, Bill C-317 proposes to alter the current tax-exempt status of labour organizations.

As a result of this determination, I find that Bill C-317, by distinguishing between certain labour organizations, creates a new class of taxpayer and that this new class of taxpayer would then be subject to a removal of an alleviation of taxation.

For the reasons stated, I must, therefore, rule that Bill C-317 should have been preceded by a ways and means motion. Consequently, I also rule that all proceedings on the bill to date, namely introduction and first reading, have not respected the provisions of our Standing Orders and are, therefore, null and void. Accordingly, the Chair directs that the order for second reading of the bill be discharged and the bill be withdrawn from the order paper.

However, I am reluctant to deny the member what is likely his only opportunity in this Parliament to have an item on the order of precedence.

As members are well aware, Standing Order 94(1) provides the Speaker with the authority to “make all arrangements necessary to ensure the orderly conduct of Private Members' Business”.

In light of the unique nature of this particular situation, the member for South Surrey—White Rock—Cloverdale will be permitted to substitute another item onto the order of precedence. The substitution shall be done pursuant to the spirit of Standing Order 92.1, which allows a member 20 sitting days to substitute another item of private members' business for the item that has been discharged and withdrawn. Should the member choose not to replace the item within the next 20 sitting days, his name will then be dropped from the order paper.

I thank the House for its attention.

Bill C-317--Income Tax ActPoints of OrderRoutine Proceedings

October 25th, 2011 / 10:05 a.m.
See context


Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC

Mr. Speaker, I appreciate the opportunity to respond to the point of order raised by the member for Windsor—Tecumseh regarding my private member's bill, Bill C-317. The thrust of the argument was that my bill would do something that only the government is allowed to do.

The history behind this is that, within our parliamentary system of democracy, only ministers of the day have the authority to propose new taxes. Before they are allowed to propose a tax, they must bring forward a ways and means motion to notify the House of Commons of their intention.

At page 900 of the House of Commons Procedure and Practice, second edition, it states:

The House must first adopt a ways and means motion before a bill which imposes a tax or other charge on the taxpayer can be introduced. Charges on the people, in this context, refer to new taxes, the continuation of an expiring tax, an increase in the rate of an existing tax, or an extension of a tax to a new class of taxpayers.

Thus, this has been a limitation on the use of private member's bills.

No one is suggesting that Bill C-317 proposes a new tax, or is the continuation of an expiring tax, or an increase in the rate of an existing tax. The member is only trying to object to my bill on the grounds that it is the repeal of an existing alleviation of taxation and an extension of a tax to persons who are not already taxpayers--in other words, a new class of taxpayer.

If that were the case, then he would be correct to suggest that the bill be discharged. However, my colleague has read more into my bill than actually exists. He is mistaken because he fails to recognize the limited purpose and effect of the bill, which is to simply require more complete and public disclosure of a union's finances on a regular basis.

First, his assertion that the bill “repeals the existing alleviation of tax” is incorrect. The bill does not remove any tax deduction. Bill C-317 maintains the status quo and does not grant the Canada Revenue Agency any powers, including any taxation powers, that it does not already have. The CRA is already empowered to compel financial disclosure. It can do so as a result of its mandate to ensure that organizations with tax exempt status do not engage in activities that would no longer justify that status. This power, the power it already has, is a simple function of its mandate to ensure compliance with the Income Tax Act. It is a mandate that the CRA exercises in respect of all classes of taxpayers who must comply with the act.

It is true that the bill would change things. The failure to comply with the additional disclosure proposed by the bill could also result in a union losing its tax exempt status. However, this loss of tax exempt status would result from the already existing enforcement provisions of the Income Tax Act and not from any provision contained in Bill C-317.

In other words, if a union violates the current requirement to disclose, the CRA can remove its tax exempt status. That is true whether my bill passes or not. All my bill would do is increase the quantity and public nature of that disclosure with the same enforcement authority that the CRA already has.

My colleague also raised the issue of my bill creating a “new class of taxpayer”. According to the Income Tax Act, the term “taxpayer” is defined to include “any person whether or not liable to pay tax”. Even if an individual earns no income, he or she is still a taxpayer. However, the class contemplated in the member's unlikely example of a labour organization that chose to violate the Income Tax Act already exists. This existing class is the class of taxpayers who pay union dues. He is trying to pretend that the class is those who are in one tax bracket or another and who may change their tax bracket and tax payable as a result of a union losing its tax exempt status.

In the context of the loss of dues deductability, differentiating on the basis of income tax brackets is irrelevant to identifying a class of taxpayer. In fact, those who are affected by the loss of the union's tax exempt status have only one thing in common: they are a single class of taxpayers under the Income Tax Act who pay union dues.

The legislation only has the potential to affect this already existing class of taxpayers. Their tax bracket does not matter. The point is their loss of dues deductibility. That is their class and it is an already existing class. Whether they pay more or less tax as a result of rulings by the CRA is a function of the CRA's normal day-to-day operations, not the result of this bill. In other words, this class of taxpayers is already subject to fluctuations in the level of taxation to which it may be subject under the current legislation and CRA 's interpretations and administration of the act.

I have one more point to make in response to my colleague's point of order. He claimed that the ruling in Bill C-470 from the 40th Parliament should be distinguished from this case because union members would be obligated to pay dues while charitable donations are discretionary. Even if it is accepted that the bill may have the effect claimed by my colleague, and I do not concede that it would, it must be pointed out that union members whose union has lost its tax exempt status for refusing to disclose have the right to exercise certain options. Those options include the option to be represented by another union, a union that has maintained its tax exempt status. This would serve to ensure that member dues continue to be eligible for a tax deduction. Therefore, the ruling in Bill C-470 is a relevant precedent to be relied upon on this particular point.

Those points conclude my response to the point of order raised by the member for Windsor—Tecumseh.

Bill C-371—Income Tax ActPoints of OrderGovernment Orders

October 18th, 2011 / 6 p.m.
See context


Joe Comartin NDP Windsor—Tecumseh, ON

Mr. Speaker, I rise on a point of order regarding Bill C-317, An Act to amend the Income Tax Act (labour organizations), standing in the name of the member for South Surrey—White Rock—Cloverdale.

The bill proposes to amend the Income Tax Act in an effort to force labour organizations to submit for all to see, that is complete public disclosure, an incredibly onerous level of detailed financial information about their work on behalf of their members. While labour organizations already abide by financial disclosure rules, mostly imposed at the provincial level of government, they do that because it ensures they are accountable to their members and not just because they are driven by legislation.

The bill, which is mostly ideologically motivated, would seek to expose virtually every last detail of a labour organization's financial books. The risk of this is that it gives access to other business organizations in which members may be involved in labour negotiations or labour disputes, exposing their knowledge base to some risk in that regard.

Aside from the privacy concerns over making this level of financial detail available to the public, it shows the thrust of the government, as we have seen with the labour disputes, back-to-work legislation recently and more threats of it at this point, but that culminates now by a government member bringing forth as a private member's bill what should in fact be a government bill, and that is really where my point of order lies. By imposing these types of conditions Conservatives, they are precipitating action that should only be precipitated by a government bill.

The measures set out in the bill include a threat of delisting the labour organization for non-compliance. One of the points that has been missed in this regard about its consequences, because we are not just talking about national labour organizations or national unions, is it includes a local labour council, a union local, even a small one of say 20 or 30 members, a national labour organization, or even a federation of labour. It covers all of them. My concern with the admissibility of the bill is it would have the effect of raising taxes, which is the exclusive prerogative of ministers in the House of Commons and cannot be done by private members' business. At page 1114 of House of Commons Procedure and Practice, second edition, it states:

The power to initiate taxation rests solely with the government and any legislation which seeks an increase in taxation must be preceded by a ways and means motion.

As a result of this and the reasons I will set out in greater detail shortly, Mr. Speaker, I would ask you to rule that the proceedings on the bill to date, namely its introduction and first reading, which it already had, have not respected the provisions of our Standing Orders and are therefore null and void and further that you direct that the order for second reading of Bill C-317 be discharged and the bill be withdrawn from the order paper. Those are the two orders I would be seeking from you, Mr. Speaker.

To begin, I draw attention to Speaker Milliken's ruling on November 28, 2007, at pages 1463-64 of Debates. Therein he references page 896 of Erskine May's Parliamentary Practice 23rd edition, which states quite clearly, ”

—“the repeal or reduction of existing alleviations of taxation” must be preceded by a Ways and Means motion.

It is not a discretionary call. It is a must situation.

It is clear to me and I suspect that you will agree, Mr. Speaker, that the income tax exemptions that apply to labour organizations and the reduction of taxable income as a result of writing off the dues paid by their members would easily qualify as alleviations of taxation. Further, the provisions of Bill C-317 would repeal those alleviations by terminating the labour organization's Income Tax Act exempt status.

Furthermore, while the House of Commons Procedure and Practice, second edition, at page 900, lists four limited categories of charges on the people, which would require a ways and means motion before tabling in the House, if you trace this passage back to the primary source of the reference, Mr. Speaker, you will find what seems to be much more clearly worded guidelines. I would ask you to pay particular attention because there seems to be, and I will not say a contradiction, greater clarity if we go further back in our history in this regard.

Citation 980 of Beauchesne's Parliamentary Rules & Forms sixth edition, on page 265 states that a:

Ways and Means motion is a necessary preliminary extension of the incidence of a tax so as to include persons not already payers.

“Persons not already payers” is a much more specific restriction than creating a new class of taxpayers, which is the guideline set out at page 900 of the House of Commons Procedure and Practice, which I cited a moment ago. It is the difference between finding that a bill creates a new type of taxpayer and finding that a bill creates taxpayers out of those who did not pay tax before.

In the case of the 41st Parliament Bill C-317, examples are readily available to illustrate how the incidence of the federal income tax on dues-paying members of a labour organization might be extended under the proposed changes to the Income Tax Act to make federal income taxpayers out of persons who previously were not. Therefore, we are creating new taxpayers.

Consider if you will, Mr. Speaker, the hypothetical case of a dues-paying member of a labour organization who pays no federal income tax because the member's taxable income falls just short of the amount covered by the personal income tax exemption. If this person's labour organization were to lose its ITA exempt status for failing to meet the conditions set out under the provisions of Bill C-317, his or her membership dues would no longer be excluded from personal taxable income. This increase in taxable income could easily push his or her taxable income to an amount over that which is exempt, effectively creating a federal income taxpayer where there was not one before, which is the very definition of Beauchesne's description of what is not permissible in this place without a preceding ways and means motion, which only can be brought by the government of the day.

I am anticipating an argument from the government side on the private member's bill, so I reviewed a precedent on this matter. I fear there may be a temptation to use Speaker Milliken's decision of March 15, 2010, on Bill C-470 from the 40th Parliament, as a relevant precedent to the question on hand today, so I will ask you, Mr. Speaker to take extra caution when reviewing the decision. While there are some similarities between the two bills, I would submit that the many differences will lead you to rule the opposite particularly when using the much more specific delineation of the rule in question as laid out in Beauchesne's.

I am not sure it will be necessary in your deliberations, Mr. Speaker, but I would draw to your attention just one of the many important differences between the two bills, the one in the 40th Parliament and this one today, which is the stark contrast between labour organizations and charitable ones. In particular, members of labour organizations would continue to have an obligation to pay their membership dues, as they do under provincial legislation, even in the event of the organization's delisting from ITA exempt status, whereas charity donors' contributions are completely discretionary. Finally, labour organizations are selected, supported and held accountable by the very dues-paying members who make the financial contributions in the first place. Charities are not.

In conclusion, Mr. Speaker, I would again ask that you rule that the proceedings to date under Bill C-317, An Act to amend the Income Tax Act (labour organizations) standing in the name of the member for South Surrey—White Rock—Cloverdale namely, the introduction and first reading, have not respected the provisions of our Standing Orders and are therefore null and void and that you direct that the order for second reading of Bill C-317 be discharged and the bill withdrawn from the order paper.

It is quite clear that the bill should be presented, if it is going to be presented at all, by the government of the day. It would bring forth a ways and means motion and then the proper bill would flow from that. This attempt to do it through the back door by way of a private member's bill is really a serious breach of the Standing Orders of the House.

The House proceeded to the consideration of Bill C-470, An Act to amend the Income Tax Act (disclosure of compensation — registered charities), as reported (with amendment) from the committee.

FinanceCommittees of the HouseRoutine Proceedings

December 10th, 2010 / 12:10 p.m.
See context


James Rajotte Conservative Edmonton—Leduc, AB

Mr. Speaker, I have the honour to present, in both official languages, the ninth report of the Standing Committee on Finance regarding Bill C-470, An Act to amend the Income Tax Act (revocation of registration).

The committee has studied the bill and has decided to report the bill back to the House with amendments.

December 8th, 2010 / 4:30 p.m.
See context


The Chair Conservative James Rajotte

The final amendment we have is amendment LIB-0.1. We have an interesting numbering system. This is the Dewey decimal system for amendments.

This is to change the title of Bill C-470 by replacing the long title on page 1 with the following: “An Act to amend the Income Tax Act (disclosure of compensation--registered charities)”.

I'm going to ask Mr. Pacetti to move this.

December 8th, 2010 / 4:20 p.m.
See context

Wayne Cole Procedural Clerk

It is that Bill C-470 in clause 1 be amended by replacing line 5 on page 2 with the following:

(b) the Minister shall, unless otherwise justified, make available to the

That Bill C-470, in Clause 1, be amended by replacing line 5 on page 2 with the following: (b) the minister shall, unless otherwise justified, make available to the

December 8th, 2010 / 3:45 p.m.
See context


The Chair Conservative James Rajotte

I call the 53rd meeting of the Standing Committee on Finance to order.

Our orders today are to study Bill C-470, an act to amend the Income Tax Act , and we have clause-by-clause consideration today.

Colleagues, we have with us here today as witnesses officials from the Canada Revenue Agency and the Department of Finance, who have presented to us before on this bill. We want to thank them for being with us here today to answer any of our questions or inquiries.

Colleagues, you should have amendments. I believe that you have five Liberal amendments, and you have two government amendments.

Just before I get to Bill C-470, the clerk informs me that I need the committee's approval for the operational budget request for witnesses for this study of Bill C-470. The amount requested from the committee is $13,850. You should all have that.

So moved by Mr. Szabo.

(Motion agreed to) [See Minutes of Proceedings]

Thank you.

We will now move to Bill C-470 and clause-by-clause.

Colleagues, I'll take a few minutes and outline how I think we should approach this. This is just my suggestion.

I've been going through the amendments with the clerks and the legislative clerk to get some advice. My understanding, and if I err anywhere, I am going to ask the legislative clerk to speak on this, is that the government amendment covers amendment L-1.1 and amendment L-1.2. The government amendment covers the subject areas covered in amendments L-1.1 and L-1.2.

So if it's agreeable to the committee, my suggestion is that we start with the government amendment and see if we can approve that. There is a technical change there, which I will ask members to speak to.

Liberal amendment L-2 is distinct in the sense of proposed paragraph (b), which says “the Minister shall make available”. So I would expect that Mr. Pacetti would move that amendment.

With respect to the title, “An Act to amend the Income Tax Act (disclosure of compensation)”, we would move to that.

Then we'll move to amendment L-1, which deals with amendment G-2.

I'm suggesting that we do the two government amendments first. I'm hoping that will be the simplest way to deal with this.


December 6th, 2010 / 5:05 p.m.
See context

Joan Jardin Treasurer, Kingston and District Labour Council

Hello, and thank you to the Standing Committee on Finance for allowing me a few minutes to address your honourable members.

I'm here today on behalf of all the affiliates and community members of the Kingston and District Labour Council. I'm sensing it's quite a different position or background from that of a lot of my esteemed colleagues here.

We have been chartered with the Canadian Labour Congress since 1956. I'm Joan Jardin, and I'm the treasurer of the labour council. We represent over 40 member unions and 156 union locals in the Kingston region. Our membership totals almost 10,000 workers, in addition to many community coalitions and groups. We are active in labour concerns and in employment, municipal, provincial, federal, and social issues.

As you're aware, there's a strong partnership between organized labour in Kingston and the United Way serving Kingston, Frontenac, Lennox, and Addington. I have personally been in the campaign cabinet as labour liaison for over seven years, and I've also worked on the citizens review panel, where we do the real accountability, not the paper accountability that can be published in a quick snippet. We actually go to the agencies. We look at their income. We look at the programs. We take a look at their actual outcomes, and we also visit the organization. So we do the real accountability. We can actually take a look at the organizations. Just taking one piece out of the other really is information in a vacuum and really does pit people against each other.

It's due to this very important relationship that we feel it's necessary to inform you of our thoughts surrounding Bill C-470. I hope you've received a copy of the letter that we have sent. If passed, this legislation would have a far-reaching impact, not only on the charitable sector, but on many institutions, such as schools, hospitals, universities, and more. To the extent that this bill seeks to further strengthen transparency and disclosure, we are in principle supportive. There are, however, some serious issues that the Kingston and District Labour Council sees with the bill. The Kingston Labour Council has identified five areas of concern, which will have a direct and negative effect on our community. On behalf of those I represent, I sincerely ask that this bill not be passed as written and that this committee consider all ramifications of the language in this piece of legislation.

Also, I wear another hat--and I haven't actually seen all the amendments proposed, because I actually have a full-time job in addition to working for agencies--in that I'm a teacher, and when I look at this, it seems as though there's been a problem, and you're trying to hurt the class, and I don't think any of you would like that. If there are some particular issues, we address those issues, and we find ways to deal with those. Also, I believe in accountability, but I don't believe in pretend accountability, so I think we really have to make sure we're not just making extra work for people, but that we actually are looking deep into the very important issues of charities. I wish we didn't need charities, but unfortunately we do.

First, of course, is disclosure. The disclosure requirements could be quite problematic for the vast majority of charities that are very small and have very few employees. The small charities will be forced to publicly disclose names and salaries of their staff. Of course, given the amendment changing it to $100,000, that disclosure will be a bit limited, but especially if it's a small charity, it will certainly be possible to pinpoint who they are, and that's a bit of an issue.

December 6th, 2010 / 4:55 p.m.
See context

Katherine van Kooy President and Chief Executive Officer, Calgary Chamber of Voluntary Organizations

Thank you very much, Mr. Chairman.

I appreciate the opportunity to be able to comment in person today. My name is Katherine van Kooy and I'm the president and CEO of the Calgary Chamber of Voluntary Organizations. Our 440 members reflect the diversity of this sector in terms of the size of the organizations and the range of areas in which they operate. My comments today are really based on our concern about the implications of this legislation for the broad charitable sector.

We appreciate the response to the concerns that have been raised previously about the impact of this legislation, particularly the amendment that was introduced on November 29 to remove the salary cap. Had there been a legislated compensation cap, it would have put employees of charities into a separate class through government intervention in determining compensation that should be market-driven. In doing so, government would also be sending a very strong message that the work of the charitable sector is less valuable than that of the for-profit sector.

Our organization is committed to the promotion of high ethical standards and accountability for charities. We believe that donors, charities, and communities all benefit when donors feel comfortable that their money is being spent wisely.

Through CCVO's work, we know that one of the major issues raised by organizations in Alberta and across the country is the growing overburden of multiple reporting requirements. These requirements increase administrative costs without contributing in a meaningful way to improved accountability and services to the community. Therefore, we urge that the priority of this committee be given to streamlining reporting requirements and improving the existing mechanisms first.

As already outlined by others, there is an existing mandatory reporting system in place for all registered Canadian charities through the annual T3010 reports that are filed with the Canada Revenue Agency. The system already requires substantial reporting of information about revenues and expenditures, fundraising costs, compensation levels, details about directors, and more. When organizations are not fulfilling their reporting requirements, or when the information provided raises concerns, we fully encourage the CRA to take action. They already have the power to do so. In fact, as you know, the CRA has the power to investigate not only executive salaries that Bill C-470 is now focused on, but other areas as well.

Some concerns have been raised about the information available on the CRA website. I would point out that the timeliness of reporting requirements is far more stringent in Canada than it is in the United States. In terms of the issues raised about accessibility of the information, that's a matter that can be resolved without the need for legislation.

The focus of Bill C-470 is now entirely on disclosure of compensation levels, including compensation for fundraisers, as though this is the only basis on which donors should choose to invest in charities. This information conveys nothing about the impact of the organization in pursuing its mission, or the value of its work in the community it serves. As a donor, that's the information I need in order to be comfortable that my donation is a wise one. Meaningful information about the potential impact of my donation is hard to find. At least it's hard to find in one central location.

I suggest it would be more effective for us to extend and improve the type and quality of information that's collected and available on the CRA website. These changes could be made simply through administrative reforms. If the committee feels it is necessary, the annual T3010 return could be adjusted, as others have suggested, to provide more information about top salaries. It makes sense to use the framework that is already in place. CCVO, and I'm sure many other organizations, would be more than happy to work with the CRA to continue to improve the quality, usefulness, and accessibility of information about Canadian charities.

We do not support the need for this legislation. However, if the committee decides that legislation is required, we urge, as others have, that two amendments be included to further enhance the positive addition of a minimum threshold for reporting the top five salaries in an organization.

First, include an escalator clause that will adjust the threshold level automatically for inflation. This would preserve the intent of reporting on executive-level compensation and not drift down over time into reporting on non-executive staff.

Second, we also feel it's essential that the minister be able to exercise discretion to deal with situations where public disclosure of the names and salaries of employees could compromise their safety.

Finally, we recommend that there be opportunity for further consultation on any new changes that may be proposed to this legislation. This is to ensure that the changes do not in turn have unexpected consequences.

Bill C-470 is intended to increase transparency and improve information for donors. I encourage the committee to consider whether those goals are best achieved through new legislation and new provisions regarding the same type of monetary-only information, or if what is required is more meaningful information and increased follow-through on the provisions already in place for the CRA as the regulator of Canadian charities.

Thank you.

December 6th, 2010 / 4:50 p.m.
See context

Mark Blumberg Partner, Blumberg Segal LLP, Association of Fundraising Professionals

Thank you, Mr. Chairman.

My name is Mark Blumberg. I'm a charity lawyer in private practice and a volunteer with the Association of Fundraising Professionals' Canadian government relations committee. I've written quite extensively on Bill C-470, and I'm grateful for the opportunity to address you today.

The Association of Fundraising Professionals, also known as the AFP, is a global professional association for individuals responsible for generating philanthropic support for a variety of non-profit charitable organizations. The AFP advances philanthropy in society by enabling people in organizations to practise effective and ethical fundraising. The core activities through which AFT fulfills this mission include education, training, mentoring, research, and credentialling. AFP is the largest association of fundraisers in the world, representing more than 30,000 practitioners, including 3,100 members in 16 chapters across Canada.

AFP appreciates the spirit of Bill C-470, strongly supports transparency and good stewardship, and is pleased to learn of recent amendments proposed relative to the bill. However, we remain concerned about the bill for a number of reasons.

First, there are already rules on charity compensation. CRA notes that compensation should be fair and reasonable. Otherwise, if compensation were disproportionate to the services rendered, it would contravene the Income Tax Act. The CRA's fundraising guidance, which is available on the charities directorate website, also discusses good staffing processes and notes that the salary should “never exceed the fair market value for the services provided”.

Second, a regulatory framework for transparency already exists. On the revised T3010B , the Canada Revenue Agency already requires that charities must provide compensation information for their ten most highly paid employees in one of nine ranges to the CRA, which then publishes them. Creating another secondary disclosure is unnecessary.

Third, non-profit board members and administrators are already subject to CRA scrutiny and have a fiduciary duty to make sure that all decisions, including those concerning employee and executive compensation, are made in the best interests of the registered charity.

Fourth, CRA already has the power to ask charities, first, to provide additional compensation detail as it deems appropriate, and second, to publish that information. This appears to make the bill as revised unnecessary.

Fifth, providing simply the name, job title, and annual compensation without context could be misleading. One researcher might be paid $150,000 and another $250,000. Which charity is providing appropriate compensation? Or might both be appropriate subject to differing circumstances? To know the answer, an individual would require information including, but not limited to, information on experience, professional qualifications, amount of responsibility, and comparable market compensation.

AFP has strongly supported past tough measures to enhance transparency and accountability, including the June 2009 guidance on fundraising, which owing in large part to open, comprehensive, and cross-sector consultation was well designed and welcomed by the sector. Indeed, the recent Attorney General’s report, while noting capacity challenges, specifically highlighted CRA's improved performance in charity regulation and enforcement.

AFP proposes that this bill not go forward at this time. Instead, we propose that the charities directorate of the Canadian Revenue Agency be instructed to immediately and urgently undertake consultation with the sector and other interested parties about increasing transparency and accountability. CRA Canada, without changes to the Income Tax Act, has already significantly increased disclosures in the T3010B on a number of different issues, including expanding salary ranges from $120,000 to $350,000 and up. That did not require any legislative changes, and I don't believe Mrs. Guarnieri was even aware of that change.

AFP strongly believes that it would be beneficial to this sector, its stakeholders, and the CRA to have greater transparency and more relevant information available. CRA has a proven record of delivering on such matters.

In conclusion, AFP would like to thank the Standing Committee on Finance for this opportunity to appear, and we are available to provide any additional information you require in your deliberations on this important issue.

Thank you.

December 6th, 2010 / 4:35 p.m.
See context

Chair, National Charities and Not-for-Profit Law Section, Canadian Bar Association

Terrance Carter

This raises the last point of concern, and that is the potential prejudicial impact that Bill C-470 could have on the workforce within the charitable sector.

Employees of registered charities are a diverse group, often changing positions within the sector as well as coming into and out of the charitable sector. This is due in part because their compensation tends to be lower than in the business or public sector. As well, there's often less security in their positions and availability of pensions compared to public sector positions.

The charity sector workforce is driven by a passion for what they do. They are generally prepared to receive less compensation than their counterparts in the private sector or in government. To now require those same individuals who receive compensation in excess of $100,000 to have their name, job title, and compensation made public may have the effect of driving good people from the sector.

In addition, for those employees working and travelling in areas of conflict—

December 6th, 2010 / 4:35 p.m.
See context

Terrance Carter Chair, National Charities and Not-for-Profit Law Section, Canadian Bar Association

Mr. Chair, members of the committee, thank you for the invitation to appear before the committee to provide comments on Bill C-470.

My name is Terrance Carter, and I am chair of the charity and not-for-profit law section of the Canadian Bar Association.

CBA is a national association of 37,000 jurists from across Canada, including lawyers, notaries, law teachers, and students. This submission was prepared by the national charity and not-for-profit law section of the CBA. Members of the section include lawyers from across Canada who advise or serve on the boards of charitable and not-for-profit organizations.

At the outset, the CBA section is very pleased that amendments to Bill C-470 have been proposed to remove the compensation cap of $250,000. What remains of Bill C-470 is a requirement to make available to the public “the name, job title and annual compensation of the five executives or employees with the highest compensation” in excess of $100,000. In this regard, the CBA section questions the need for a name and salary disclosure requirement proposed in the bill.

As will be explained, the stated objective of the bill, namely the need for transparency, in our opinion can be met by permitting the charities directorate to monitor the activities of registered charities, including compensation through executives and other employees in accordance with subsection 149.1(14) of the Income Tax Act requiring all registered charities to file an annual T3010B, registered charity information return.

The concerns of the CBA section will be addressed by explaining three problematic aspects of the bill as amended. Specifically, they are redundancy in transparency objectives, privacy concerns, and the potential prejudicial impact upon the charitable sector workforce.

First, transparency and accountability in the charitable sector is no doubt a desirable objective. However, transparency is not an absolute value, and it must be balanced with privacy, efficiency, and practical impact of the disclosure to be made.

The requirement by CRA that every registered charity must include in its annual T3010B disclosure the compensation ranges, from under $40,000 to over $350,000—but not the names or job titles of persons receiving them—for the ten highest-paid employees provides a suitable level of transparency for both CRA, as the regulator, and the public, without violating the privacy of the employees of the charity.

If the CRA becomes concerned about the question of compensation, they have the authority under the Income Tax Act to conduct an audit and require the disclosure of all details of compensation, including the name, job title, and actual amount paid as compensation. A registered charity that fails to disclose such information is subject to sanctions, including the ultimate sanction of revocation of charitable status.

With regard to the matter of privacy, the CBA section believes there is an unnecessary and unwarranted intrusion of an individual's privacy in requiring disclosure of the name, job title, and compensation received by an employee or executive of a charity simply because the person works for a registered charity. The charity may receive no direct government funding and it may not even issue tax receipts for tax credits.

There is no compelling policy reason from an income tax perspective, either based on transparency or accountability, to require the identification of individual employees in the manner called for in the bill.

In order to justify an intrusion of a person's privacy, there needs to be a cogent policy reason for doing so. Since CRA is already collecting and making public the compensation range of the top ten employees of a charity and it has the ability to audit and review the details of compensation paid to such employees, there's no policy reason to justify the intrusion upon an employee's privacy.

December 6th, 2010 / 3:50 p.m.
See context

Alan Dean Vice-President, Board of Governors (volunteer), National Office, Canadian Red Cross

Thank you, Mr. Chairman and members of the committee.

My name is Alan Dean. I'm very pleased to be here today in my capacity as vice-president of the board of governors of the Canadian Red Cross. I also chair the pension committee and the governors committee of the Red Cross in Canada. I fulfill these roles as a volunteer and have been involved with the Red Cross for eight years, both at the provincial and the national level. In my professional life I'm a partner with the law firm of Gowling Lafleur Henderson.

The Canadian Red Cross is Canada's leading humanitarian organization, providing services in Canada and abroad ranging from health intervention to disaster response. The Canadian Red Cross is an independent organization governed by a volunteer board of governors. Internationally, we are members of the Federation of Red Cross and Red Crescent Societies. In Canada, we are a large and a complex organization. We have over 6,400 staff, supplemented by a trained volunteer force of approximately 20,000 people.

The volunteers and the staff are responsible for carrying out the Canadian Red Cross's mandate. They also ensure, in doing that, that our programs are properly funded and that our funds are managed efficiently. Our revenues in 2009 were $372 million, and we are fully compliant with the CRA filing regulations.

Our governance model is woven throughout the organization from a regional to a fully national level. We strongly support the objectives of accountability and transparency. We strive to maintain the highest level of public trust through our efforts. We believe firmly that our donors deserve no less, both in terms of accountability for the use of the funds donated by Canadians who work hard for their money and of the best possible information upon which to base their charitable donation decisions.

So we commend the work of this committee in ensuring that Canada's laws and regulations are up to date and sufficient in terms of ensuring an appropriately high level of transparency.

We are pleased to note that the sponsor of Bill C-470 has chosen to amend the bill in order to remove the previously included compensation cap. Directors of charities must serve without remuneration. They bear a heavy duty and are viewed as higher-order fiduciaries with trustee-like responsibilities, unlike their counterparts in the for-profit sector. A salary cap would have severely limited a board's ability to select qualified management staff and hire the best and the brightest, so we applaud the amendment to remove the compensation cap.

We currently comply with the robust reporting and transparency requirements mandated by the Canada Revenue Agency. As you know, charities like ours are now required to identify the salary range for their ten highest-paid positions, and these salary categories have been expanded. If parliamentarians decide that the existing disclosure regulations, including the new Canada Revenue Agency requirements of 2009, are lacking, we would welcome the opportunity to work with you in examining other models for disclosure and transparency.

In particular, we take positive note of the proposed amendment to Bill C-470 that establishes a floor for salary disclosure of $100,000. We have no objection to this proposed floor, nor to the concept of releasing specific information regarding job titles or descriptions and specific salary amounts for employees who would fall into the categories for disclosure that Parliament might establish. That said, there may be specific circumstances in which the information related to a particular individual should not be disclosed, to protect that individual's safety and security. To address those, we agree with the notion of giving the minister responsible some discretion to withhold information, to protect individuals from harm.

Thank you very much, Mr. Chair and members of the committee. I would be pleased to respond to any questions you may have.

December 6th, 2010 / 3:40 p.m.
See context

Tom Closson President and Chief Executive Officer, Ontario Hospital Association

Good afternoon. My name is Tom Closson and I'm president and CEO of the Ontario Hospital Association. The OHA represents Ontario’s 154 public hospitals, virtually all of which are CRA-registered charities.

We originally requested the opportunity to appear before this committee because we had grave concerns about the effect the proposed salary cap included in Bill C-470 would have on hospitals across Ontario and the largest and most successful hospital foundations. The majority of Ontario's hospitals employ at least one individual who earns more than $250,000 per year. In many hospitals these individuals include physician leaders or physician specialists. In Ontario, approximately 15 hospital foundations pay at least one employee, usually only one employee, more than $250,000.

Hospitals are in the business of providing patient care. Hospital foundations are responsible for raising the funds necessary to support the associated hospitals.

In Ontario, hospital foundations fund two-thirds of the salaries of many hospital medical researchers who are principal investigators. They're also responsible for raising 10% of the funds necessary for major capital construction projects and 100% of the funds necessary to purchase medical equipment like MRIs and CT scanners. If a hospital lost its charitable designation, its foundation could not give the hospital the funds it has raised. If a hospital's foundation lost its charitable designation, the hospital could not receive the funds raised by the foundation. In either case, the result would be devastating for the hospital's patients.

Leading a hospital or a hospital foundation is not easy. Leadership has a big impact on the success. In Ontario, hospitals and hospital foundations have volunteer boards of directors who are responsible for recruiting in-demand medical research and management talent. They also determine appropriate compensation structures and they manage performance. Their leadership has helped to make Ontario's hospitals some of the highest performing in the world. If passed unamended, Bill C-470 would undermine the responsibilities of those boards of directors, which in the case of hospitals have a direct legal relationship to the Government of Ontario. For these reasons, the OHA does not support Bill C-470 as it currently is drafted, but we acknowledge and appreciate the sponsoring member of Parliament's commitment last week to stripping out the salary cap from the bill.

With respect to the proposal to create a salary threshold of $100,000, above which registered charities would be required to publicly disclose the salaries of the top five executives, Ontario's hospitals have no objection to that. As you may know, Ontario's hospitals are already subject to our province's public sector salary disclosure, which requires us to disclose the top compensation for every hospital employee who earns more than $100,000 per year every March 31.

I also understand there has been some discussion here regarding the disclosure of the relationship that some charities have with third-party fundraising companies and that action could be taken through an amendment to Bill C-470. I would encourage the committee to refrain from doing so without additional formal examination of the issue. The operations of charities are complex and sensitive, as are their vendor relationships. I believe a full examination of all of the issues would be beneficial before action is taken by legislators.

Let me sum up by saying that the Ontario Hospital Association would have no objection to Bill C-470 if it were amended to strip out the salary cap or include a public sector requirement for the top five executives earning more than $100,000. That said, we believe that the Canada Revenue Agency already has sufficient authority to properly police the charitable sector, and we remain unclear about what substantial new benefit even an amended Bill C-470 would provide to the public.

Thank you for your time today, and I look forward to questions.