by Mike Godfrey, Tax-news.com, Washington
09 May 2017
The Canadian Government has asked the Revenue Agency (CRA) to suspend all action in relation to the remaining audits and objections that were part of the Political Activities Audit Program.
In November last year, Revenue Minister Dianne Lebouthilier launched a consultation on the rules and established a panel of experts in an effort to clarify the rules that govern the participation of charities in political activities. The panel presented its report at the end of March 2017.
As an immediate first response to the panel’s recommendations, Lebouthilier has asked the CRA to suspend all action in relation to the outstanding audits and objections that were part of the audit program. According to the report, “numerous consultation submissions noted that this program has resulted in a pervasive ‘chill’ on the public policy and advocacy activities of charities.”
In 2012, the then Conservative Government allocated CAD8m (USD5.8m) to the CRA to create a special team of auditors to monitor the work of charities. However, in 2014, the CRA was accused of misusing its auditing powers in the Government’s favor. In January 2016, the incoming Liberal Government announced that it would wind down the audit program.
To date, 54 audits have been undertaken as part of the program. The panel report found that several of the audits have yet to be completed. The panel recommended that the CRA conclude the remaining audits as soon as possible, and suspend any decisions specifically relating to political activities in these audits, pending the implementation of the report’s other recommendations.
The panel report noted that the audits “received a great deal of public attention, with concerns raised that they were politically selective.”
“Many charities backed away from public policy engagement entirely. And, running through the highly critical commentary on this audit program was a continued assertion that the rules governing charities’ political activities were unclear,” it said.
Under the current rules, the CRA registers charities under the Income Tax Act and monitors the sector to ensure that registered charities comply with the Act’s requirements. Only 10 percent of a charity’s resources may go towards (exclusively non-partisan) political activities, and charities are not permitted to endorse or oppose any particular candidate or party.
Published at Mon, 08 May 2017 19:00:00 -0500