By Terrance S. Carter and Ryan M. Prendergast

Following his appearance before the Senate Committee on Human Rights, the Taxpayers’ Ombudsperson, François Boileau, provided a statement on November 21, 2022 (the “Statement”) regarding the progress of the review of the Canada Revenue Agency’s (CRA) treatment of Muslim charities. The Office of the Taxpayer’s Ombudsperson (the “Office”) was asked to review the CRA’s practices after allegations of systemic anti-Islamic bias and discrimination arose in 2021, as reported in our  February 2022 Charity and NFP Law Update.

The Ombudsperson was asked by the Minister of National Revenue to scrutinize the selection of files chosen by the CRA’s Review and Analysis Division, the quality of service in interactions between the CRA and Muslim charities, and anti-bias training within the CRA.

One of the main concerns of the investigation is the auditing of Muslim charities. Issues include the selection process for audits, their conduct, equity during the audit process, transparency, communication with charities being audited, and the timeliness and fairness of their outcome.

The Ombudsperson expressed confidence in the Office’s ability “to assess the existing policies and practices related to services”, in his Statement, and that he believes in their ability to answer questions related to CRA practices and anti-discrimination policy. However, Boileau stated that it would be “impossible for us to validate” certain aspects of the CRA’s practices because of legislation and CRA policy.

Section 241 of the Income Tax Act prevents the CRA from sharing aspects of taxpayer information, even with the subject’s consent. Furthermore, the CRA’s current practice is not to disclose certain information, particularly regarding its risk assessment process, invoking national security concerns as a justification. For this reason, the Ombudsperson stated that the Office may not succeed in analysing the CRA’s audit selection process::

To be clear, some of the participants told us that they felt they had been unfairly selected for audit purposes. Some indicated that they sometimes felt intimidated, and many described the process as tedious. However, we cannot verify these alleged facts without having access to complete taxpayer files.

Despite the obstacles to completing their original goal, the Office has committed to having a report to the  Minister of National Revenue ready for the stated deadline of March 2023.

This appears to be an unfortunate example of the federal government hampering an independent, fact-finding investigation. The issue of possible systemic bias within CRA is a dire issue for many registered charities, and it is disappointing to see legislative provisions concerning privacy for taxpayer information being used as a shield by the government when there are serious allegations that need to be investigated.

​Read the January 2023 Charity & NFP Law Update