The Landmark Case: Canada Without Poverty v. Attorney General of Canada

Introduction

In a significant ruling by the Ontario Superior Court of Justice, Canada Without Poverty v. Attorney General of Canada (2018 ONSC 4147) marked a pivotal moment for registered charities in Canada, setting new precedents regarding their political advocacy rights. This case critically evaluated the constitutionality of certain restrictions imposed on charities under the Income Tax Act (ITA), specifically those that limited their engagement in political activities.

Background and Legal Context

At the heart of the case was subsection 149.1(6.2) of the ITA, which stipulated that registered charities could only conduct political activities that were ancillary to their charitable objectives, capping those activities at 10% of their resources. Canada Without Poverty (CWP), a charity dedicated to fighting poverty, argued that these constraints significantly curtailed their ability to advocate for necessary law reform, thus infringing upon their freedom of expression as protected by section 2(b) of the Canadian Charter of Rights and Freedoms.

The federal government defended the limitations, suggesting that if any rights were violated, such impositions were justifiable under section 1 of the Charter as reasonable limits on those rights.

Court's Analysis and Findings

Justice Morgan, writing for the court, focused primarily on two legal issues:

Freedom of Expression Violation

The court ruled that the restrictions imposed by subsection 149.1(6.2) limited CWP's capacity to engage with the public on law reform and policy discourse, thus infringing on its Charter-protected freedom of expression. Justice Morgan pointed out the outdated nature of the legal distinction made between charitable and non-partisan political activities, highlighting its implications for charities that rely on advocacy as part of their mission.

Lack of Justification under Section 1

The government’s defense fell short of convincing the court that the limitations had a pressing and substantial objective that could justify such an infringement of rights. The judgment emphasized that these regulations were disproportionate and lacked the necessary nuance to balance state interests with the right to expression.

As a result, the court issued a declaratory judgment stipulating that the Canada Revenue Agency (CRA) must cease applying the “substantially all” requirement regarding political activities. Charitable organizations were effectively granted the freedom to engage in unlimited non-partisan political activities, broadening the scope of permissible advocacy.

Significance and Impact

The implications of this ruling cannot be understated. By dismantling the restrictive framework of the 10% rule, the court acknowledged that advocacy is a fundamental aspect of many charities’ missions and that open communication regarding public policy is essential to their operations. This shift liberated organizations to pursue their charitable goals without fear of losing their registered status due to political involvement.

Moreover, the case underscored the inherent tension between regulatory oversight of charities and constitutional rights. It aligned Canadian charitable law with wider international discussions about the efficacy and representativeness of nonprofit political engagement.

Related Commentary

Legal experts and scholars have recognized Canada Without Poverty as a landmark case that clarifies the constitutional protections afforded to charities wishing to engage in political advocacy. This case resonates with ongoing debates in other jurisdictions, including the United States and Australia, regarding the balance needed between nonprofit regulation and the protection of free expression rights.

Summary

• The Ontario Superior Court found that the restriction on political activities under subsection 149.1(6.2) of the ITA violated freedom of expression rights protected by the Charter.
• The government could not justify these restrictions under section 1 of the Charter.
• The CRA was directed to discontinue enforcing the limits, permitting charities to conduct unlimited non-partisan political activities.
• This decision marked a substantial liberalization in the regulations governing political advocacy by registered charities in Canada.

The Canada Without Poverty case stands as a transformative moment in Canadian charity law, reaffirming that political advocacy is not merely a supplementary activity but a core aspect of many charities’ missions.

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