Canada Without Poverty v AG Canada

Historic Victory for Canada Without Poverty

Canada Without Poverty (CWP), working with SRAC and pro bono lawyers at McCarthy's, won a historic victory for people living in poverty, for charities, and for Canadian democracy on July 16, 2018. Justice Ed Morgan declared that restrictions on charities' public policy dialogue and development in the Income Tax Act are contrary to the Charter and of no force and effect.

SRAC and CWP are grateful to the Ontario Legal Aid Plan Test Case Funding Committee for funding for SRAC and CWP to develop this case, in close collaboration with pro bono counsel at McCarthy's.

Because CWP recognizes that effective relief of poverty must involve people living in poverty in public policy development and dialogue, all of their projects include open communication with people living in poverty and with the public. Through the exchange of ideas, they explore ways in which laws, policies, and decisions could be changed so as to reduce and eliminate poverty. The Income Tax Act, however, restricted any such activity to approximately 10% of resources, and the Canada Revenue Agency, with additional funding provided under the Harper government, moved to remove CWP's charitable status.

As Justice Morgan noted in his ruling, historically, charities shared only food and bread with the poor, but modern charities like CWP share ideas. In doing so, they promote the equal participation of people living in poverty in democratic processes and decision-making through which effective policies to address poverty can be designed and implemented.

Upon election, Prime Minister Trudeau issued a mandate letter directing Ministers of Finance and National Revenue "to allow charities to do their work on behalf of Canadians free from political harassment ... This will include clarifying rules governing "political activity" with an understanding that charities make an important contribution to public debate and public policy."

In 2016 a consultation panel was appointed by the Minister of National Revenue to make recommendations regarding the participation of charities in political activities. The panel recommended that the restrictions in the ITA be removed "to explicitly allow charities to fully engage without limitation in non-partisan public policy dialogue."

On October 31st, the government announced that it will amend the Income Tax Act to conform with the panel's recommendation and therefore with Justice Morgan's decision. The legislative proposals, however, would have reinstituted common law restrictions and would not have complied with Justice Morgan's order. Moreover, the government previously announced, just prior to the deadline for appeal, that it will be appealing Justice Morgan's decision to the Ontario Court of Appeal. Their Notice of Appeal stated that they will continue to argue on appeal that the protection of freedom. Widespread mobilization among charities, however, eventually succeeded in convincing the government to withdraw their appeal and to change the Income Tax Act to conform with the Charter decision. Section 141.1(1) of the Act now states that "charitable activity includes public policy dialogue and development activities carried on in furtherance of a charitable purpose; charitable activities as including public policy." This is an historic advance in charities law in which Canada is now the global leader.

In a landmark decision, the Ontario Superior Court of Justice struck down restrictions on the political activities of charities as a violation of the Charter right to freedom of expression. This case, Canada Without Poverty v. Attorney General of Canada, affirmed the vital role of charities in public policy debates.