Finance Committee on Nov. 1st, 2018

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thanks, Mr. Chair.

I appreciate the explanation, but I'm left a little bit perplexed because the actual wording in the budget bill is for a charity or for a sports amateur athletic association “that devotes any part of its resources to the direct or indirect support of, or opposition to, any political party”. That would seem to indicate that 0% of resources can be devoted to political activities, depending on how you define “indirect support of, or opposition”.

I'll give you a case. We have a pipeline going through my area. People are livid about it. There are a lot of environmental charities that are raising concerns. They're opposed to the pipeline for very legitimate reasons. The moment that they tie in the Liberal government or Mr. Trudeau to that, it would seem to me to pass that line of “indirect support of, or opposition, to any political party”.

It seems very unclear to me. I don't see this increasing the ability for political activities, but rather eliminating any possibility for political activities, depending on how “indirect support of, or opposition to, any political party” is defined. The devil's in the details here.

[Blaine Langdon]

I'll try to clarify the existing state of affairs and speak a bit more about the example that you've just raised.

Under the current rules and under charity law, there are two types of political activities. There's the non-partisan type of political activity, which would be the support or opposition to a change in law or government policy, or something like that. These amendments are effectively designed to create some space for this. We're removing the restriction. Currently, charities are restricted to only devoting up to 10% of their resources in opposition to, or support of, some policy proposal or change in law. The concern was that charities felt unduly restricted in being able to provide their expertise to members of Parliament on particular issues that were of importance to them. These amendments are designed to remove those restrictions and allow charities to have unlimited ability to carry on political activities in furtherance of their charitable purposes.

The other type of political activity, which is currently prohibited for charities—and will be prohibited under the new rules—is any activity that involves the direct or indirect support of, or opposition to, a candidate for public office or a political party. Those will remain prohibited. Using the example that you gave, an organization was established for the protection of the environment and it wanted to raise its concerns about the pipeline or some other environmental issue. Under these provisions, the charity would be allowed to do that and would no longer be constrained by the 10% limitation. To the extent that the charity went further and started to directly or indirectly support a candidate for public office or a political party on the basis of the same issue, that would be prohibited.

To get back to a previous question, I think the devil will be in the details, obviously. Over the next couple of months, we will be thinking about and working on trying to be clear about what constitutes a partisan activity and what constitutes direct or indirect support of a political party or candidate for public office. There's some existing guidance on that, but we'll be focusing on providing more comprehensive guidance for the sector with respect to that.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you.

How is “indirect support of, or opposition to, any political party” defined currently? I think we would all understand “direct”, but how broadly is “indirect” defined currently?

[Blaine Langdon]

I would say that currently there isn't comprehensive guidance on what that means. The CRA does have a document that speaks to issues like, obviously, financially supporting a political party or calling for—

[Peter Julian, NDP, New Westminster—Burnaby, BC]

That's “direct” support, but “indirect” is where it's completely unclear. I think, if you asked all of us around the table, you would get 10 different definitions of what indirect support or opposition to a political party might mean. If CRA does have a clear definition of that available, it would be very helpful, I think, to this committee to get that current definition of indirect support, because this is written into the legislation. If it's unclear now where that line is, that concerns me, because once it is not clear, it could mean a reduction in the ability of charities to speak out on issues they care about, rather than an increase.

[Blaine Langdon]

What I would say is, again, this is a pre-existing provision, so we're not changing that restriction. We're not adding the word “indirect.” This is a very good question and a very good point. These amendments follow the recommendations of the panel on political activities by charities that was commissioned by the Minister of National Revenue. One of the issues that they did identify was the lack of clarity around the concept of indirect support or opposition to a political party. We are definitely looking at that issue. We'll be happy to provide the existing guidance from the Canada Revenue Agency, but it's certainly something that we're looking to develop. We will be developing this, I think, in consultation with the charitable sector to provide some clarity around those rules.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Is that something that you could provide to us this week, the CRA's existing definition of indirect support or opposition to?

[Blaine Langdon]

As I said, the guidance is relatively short, but I'll provide what they have.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you.

[The Chair, Liberal, Wayne Easter]

Provide that through the clerk, Mr. Langdon, so that we'll get it immediately.

Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

This may have been clarified or maybe not. I'm not absolutely sure, but I do want to ask either way.

On page 13 of 19, when we're discussing charities and political activities, it says that, as a result of these changes, charities will be entitled to carry on political activities without regard to specific limits provided that those activities are ancillary and incidental to the fulfillment of its charitable purposes.

I read that and I think of a big hole. To me, that leaves a lot of leeway in how one would interpret that. If I was at CRA reading that, I would wonder how that would be fulfilled in the sense of how I was supposed to police it, if I can use that term, Trevor, Pierre and Blaine. How do I define it? How would I look at a charity? To me, that statement is so open-ended that it is contradictory the way I read it. You are saying that they they are entitled to carry on political activities without regard to specific limits, but the activity has to be ancillary and incidental to the fulfillment of its charitable purposes.

Is there anything quantitative around that or is there anything tangible that will provide direction to the individuals having to look at those charities?

[Pierre Leblanc]

I think a key principle that underpins the current legislation and that will remain true under the proposed legislation is that charities have to be constituted and operated for exclusively charitable purposes.

There are four main heads of charity: the advancement of education, the relief of poverty, the advancement of religion, and other types of activities that have been determined to be charitable by the courts. Those would include the environment, human rights, health. Any activities, any non-partisan, public-policy dialogue that is considered to be in furtherance of those charitable purposes would be considered. Those are the means, but as long as the end continues to be the furtherance of those charitable purposes, it will be permitted under the legislation, without limit.

It will be for the Canada Revenue Agency to determine specific cases, but by way of example, as we mentioned, one of the four heads of charity is relief of poverty. If an organization decides that most or pretty well all of its activities are based on the idea that changes in existing laws are the best way to achieve its stated charitable purpose, which is relief of poverty, and it's done in a non-partisan way that avoids both direct and indirect partisan activity, then that's permitted. The legislative proposals are intended to encompass, to allow, that activity.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Would a charity that is arguing for a better environment—we all advocate for a better environment—and does not like a certain source of energy, have no specific limits on what it could advocate for?

[Blaine Langdon]

I wouldn't want to predetermine how the CRA is going to interpret what an activity in furtherance of a charitable purpose is, but I would say that if an organization is advocating for a change in law or policy that has been determined to be in furtherance of a charitable purpose, yes, that could be their main or sole activity.

[The Chair, Liberal, Wayne Easter]

Mr. Fergus.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

I'd like to make a comment rather than ask the officials a question.

My colleagues around the table have raised several points.

I've personally worked with charities to make the act that was in force at the time a lot more flexible. The situation my Ontario colleague referred to is precisely the reason why we're at this point. We tried to make changes that would now be possible under this bill.

It's the environmental groups that wanted this. What will they do as charities when they advocate for a greener environment? They'll be campaigning on that very issue, but, at some point, they'll have to try to advance their cause and convince Canadians to adopt their position.

That's been interpreted as a political activity that exceeded the 10% limit. It was too restrictive. This is the reason they've gone after the present and previous governments. However, following the discussions and consultations of the group the minister established, they came to the conclusion they needed a lot more flexibility. It has to be acknowledged that some charities carry on activities that are political but non-partisan. There's a big difference.

The reason I raise this point is that I wanted to see whether you had made a real attempt to address the problem, and I think you have. Of course, there will be particular cases that exceed the limits. I have every hope the agency will restrict the activities of certain groups if need be.

As politicians, we will have an opportunity to review the matter. At some point, however, people have to promote their interests, if they're opposed to the death penalty, for example, and there's a way for people to do that without being considered partisan, even though it's political.

[The Chair, Liberal, Wayne Easter]

Mr. McGowan, did you want to answer, or whoever?

I understand the intent of this section, which is to try to address the concerns of charities that were fearful their advocacy work was going to lose them their charitable status. Is that correct?

[Trevor McGowan]

That's right.

[The Chair, Liberal, Wayne Easter]

Then these measures are being put in place to address that concern.

[Trevor McGowan]

That is correct. There was an issue with the existing 10% threshold. If a charity, in pursuing its charitable objectives for poverty, advancement of education or what have you, exceeded that 10% limit and was doing so in a non-partisan way, the prohibition against indirect or direct support of a specific political party or candidate was maintained from the currently existing rules. As we noted, these amendments generally follow the recommendations of the commission that had been studying and providing recommendations on charities. I say generally, because of course this bill maintains the rule against indirect support of a political candidate.

Yes, it allows for more flexibility and provides that the charities won't automatically lose their status if they are engaging in just a bit too much political activity.

[The Chair, Liberal, Wayne Easter]

Mr. Julian, you wanted in?

[Peter Julian, NDP, New Westminster—Burnaby, BC]

I want to respond to Mr. Fergus.

We're talking about two different things. We're talking about a change in the act, and we're not talking about the definition of partisan political involvement. Partisan politics is very easy to define. It involves the act of giving money to a political party or telling people who they should vote for. It's very clear.

Indirect support is actually much more vague and uncertain. There's an unknown quantity in the bill before us; it's the Canada Revenue Agency's definition, and that's what troubles me. The definition of an indirect partisan political activity is much broader than that of a direct political activity. If it were up to me to define what a "direct activity" is, I would be much more comfortable accepting this change, but the fact that we're giving the CRA the power to define that activity really troubles me.

People in my riding talk to me about many other issues, such as the fact that the CRA has redefined the disability tax credit and the child tax credit.

I'm troubled by the fact that we're leaving this definition in the CRA's hands. We should look at the current definition in the act. Under the bill before us, the CRA would be given the power to define what constitutes political involvement or indirect partisan political activity. That troubles me, and I wanted that to appear in the record.

[The Chair, Liberal, Wayne Easter]

Larry, go ahead.

[Larry Maguire, Brandon—Souris, CPC]

Thank you, Mr. Chair.

Thank you, witnesses, for coming this morning and for providing these overviews.

Mr. McGowan, I just heard you indicate, and I'm looking at the same section here, charities and political activities, and it more or less says that as a result of these changes charities will be entitled to carry on political activities without regard to specific limits. With regard to the 10% rule, you indicated just a moment ago that it's there, but it could be to allow some charities, I believe your quote was, “a bit too much political activity”. How we define that is my concern. I know there are rules, as my colleague indicated here a moment ago. How do you define that political activity? Is it the cost of airline tickets to get to Ottawa to lobby someone? How is it determined? Is it putting their view forward? That might be restrictive in some cases.

Rather than saying why don't we go to 20% and have a definitive number, as opposed to a bit more political activity, that doesn't seem very definitive to me.

[Blaine Langdon]

I think that when Trevor was referring to the concerns expressed by organizations—that they would lose their status if they carried on a bit too much political activity—he was describing the previous state of affairs. What the current amendments do with respect to non-partisan political activity—again, promoting or opposing a change in law or a change in policy, coming in to the House of Commons to meet with members of Parliament, etc.—is that it entirely removes those restrictions. There will no longer be a 10% limit. There won't be a bit more than 10%. It can be up to 100% of their activity—promoting a change in law—as long as it does not move into partisan support for or opposition to a political party or candidate for public office. I just want to be clear about that.

In terms of defining those activities, I think you're quite correct. If an organization was coming in to lobby a government official and was spending money in terms of a plane ticket and hotel costs, those would all be considered to be what's now defined as public policy development activities in the act.