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.