A. INTRODUCTION
Canada Revenue Agency (“CRA”) released its guidance
dealing with promotion of health and charitable registration on August 27,
2013. The guidance, referenced as CG-021, is entitled Promotion of Health and
Charitable Registration (“Guidance”), and replaces the following Charities
Summary Policies: CSP A19, Alcohol, Drug, Addiction, CSP-A11, Abortion (Medical
Clinic) - Women, CSP-C24, Counselling, CSP C20, Crisis Centre, CSP-D11,
Relieving Sickness, Disability, CSP H02, Provision of Health Care, CSP H03,
Health Clinic, and CSP M04, Holistic Medicine. The Guidance describes how CRA
interprets the common law and Income Tax Act (“ITA”) when determining
whether an organization created for the purpose of promoting health is eligible
to become a registered charity under the ITA.
B. PROMOTION OF HEALTH IN THE CHARITABLE CONTEXT
1. Definition
The Guidance defines promotion of health as “directly
preventing or relieving physical or mental health conditions by providing
health care services or products to eligible beneficiaries” (Para 8).
2. Categories of charity
In order for a charity to be registered under the ITA,
its purposes must be exclusively charitable, must provide a public benefit, and
must describe the scope of the organization’s activities. The Guidance repeats
the common law principle that a purpose is considered to be exclusively
charitable when it falls under one of the four categories of charity: (1)
relief of poverty; (2) advancement of education; (3) advancement of religion;
and (4) other purposes beneficial to the community in a way the law regards as
charitable. Promotion of health falls under the fourth category of charities –
other purposes beneficial to the community in a way the law regards as
charitable.
3. Assessing the charitable benefit of purposes
that promote health and the activities that further these purposes
A purpose that promotes health may be eligible for
charitable registration provided that:
¨ The purpose and activities prevent or relieve a health condition
by providing health care services or products to eligible beneficiaries;
¨ The health care services meet the standards for effectiveness,
quality and safety;
¨ The charitable benefit is provided to the public or large segment
of the public; and
¨ The health care service does not confer an unacceptable private
benefit.
Firstly, in order for the promotion of health purpose to
qualify for charitable registration, the purpose must provide a clear
charitable benefit to the public or sufficient segment of the public. A
charitable benefit must be provable and socially useful, which means that it
must be tangible or objectively measureable to be provable, and it must have a
value and impact on the public to be socially useful. The charitable benefit
must also be a direct result of the charitable purpose and the activities that
further the purpose. A charitable benefit for promotion of health is
demonstrated when a purpose and activities prevent or relieve a health
condition by administering health care services or products.
Secondly, these health care services and products must
meet the standards for effectiveness, quality and safety. The standard for
effectiveness refers to the “positive and desirable outcomes normally resulting
from a health care service or product,” such as eliminating or reducing
symptoms of a health condition (Para 8). The standard for quality and safety
refers to “the quality and safety standards normally expected to be met by a
health care provider, and the quality and safety standards normally applied to
health products” (Para 8). If the health care services and products are
recognized under the Canada Health Act or provincial/territorial medical
insurance plans, then the standard for effectiveness is already met. Cosmetic
health care services or products do not provide a charitable benefit unless
they are medically necessary for the patient, and in this situation, would be
viewed as preventing or relieving a health condition that meets the standards
for effectiveness, quality and safety.
Thirdly, in order for a charitable benefit to be a public
benefit, it must be provided to eligible beneficiaries, which are, in this
case, the whole public or a sufficient segment of the public if a restriction
is necessary to accomplish the charitable purpose.
Fourthly, for a public benefit to qualify as a charitable
benefit, it must not confer an unacceptable private benefit. The Guidance
defines a private benefit as “a benefit or advantage (charitable or
non-charitable) provided to a person, entity or organization that is not a
charitable beneficiary, or a benefit provided to a charitable beneficiary that
goes beyond what is considered to be charitable” (Para 93). A private benefit
is unacceptable when it is not incidental (i.e. necessary, reasonable, and
proportionate to the public benefit) to achieving a charitable purpose.
4. Promotion of health purposes and activities
Charitable purposes that promote health are divided into four
groups: (1) core health care; (2) supportive health care; (3) protective
health care; and (4) health care products.
a) Core health care
When an organization or institution provides core health
care services and products to eligible persons, this can be a promotion of a health
purpose. As stated in paragraph 19 of the Guidance, core health care includes
the following: (i) diagnosing and treating health conditions; (ii) assisting
with rehabilitation; and (iii) protecting and maintaining public health.
i) Diagnosing and treating health conditions
Paragraphs 21 and 22 of the Guidance provide several
examples of purposes and activities that promote health through the diagnosis
and treatment of health conditions. One example of this purpose is: “Promoting
health by providing the public with medical hospitals, clinics or dispensaries.”
An example of activities that promote health through diagnostic purposes is: “Operating
a diagnostic imaging clinic to diagnose illness or injury.”
ii) Assisting with rehabilitation
An organization that helps with rehabilitation can
promote health provided that the rehabilitation assists with the “recovery from
loss of function due to a health condition” (Para 23). Paragraphs 24 and 25
include examples of purposes and activities that promote health by providing
rehabilitation services to patients. An example of this purpose is: “Promoting
health by assisting with the recovery from alcohol addiction.” One example of
an activity that furthers this purpose is: “Establishing and operating
counseling or support group programs.”
iii) Protecting
and maintaining public health
The protection and maintenance of public health refers to
the prevention of health conditions or death. This prevention can be done by
preventing the spread of an illness, or by reducing the negative effects or
development of a health condition. An example of this promotion of a health
purpose is: “Promoting health by protecting and maintaining public health by
reducing the risk of premature delivery in pregnant women by providing
pre-natal care” (Para 27). An example of an activity in this category is: “Conducting
epidemical research into the spread of communicable diseases” (Para 28).
b) Supportive health care
Supportive health care is a promotion of a health purpose
when it provides “health-related support to individuals with health conditions”
or “extended support for families or caregivers of individuals with health
conditions” (Para 29). The standard for effectiveness is satisfied when there
is a recognized charitable benefit, and the standards for quality and safety
are usually irrelevant.
i) Providing health-related support to individuals with health conditions
Support services and products should support an
individual’s recovery from a health condition. An example of a health
promotion purpose providing support is: “Promoting heath by providing
individuals with [ovarian cancer] with services that facilitate the delivery of
health care services” (Para 32). An example of an activity that furthers a
promotion of a health purpose using supportive services is an organization
“providing toys or games to hospitalized children” (Para 33).
ii) Providing health-related support for families or caregivers of
individuals with health conditions
This type of support is acceptable provided that the
charitable benefit is discernible. An example of a purpose that promotes
health by supporting a patient’s family is: “Promoting accommodations to family
members of hospitalized or seriously ill patients” (Para 35). A related
activity could involve an organization “establishing and operating a home near
a medical facility for use by family members of hospitalized or seriously ill
patients” (Para 36).
c) Protective health care
In order to be a promotion of health purpose, protective
health care must demonstrate a protection and preservation of people’s health,
and it can do this by offering health-related emergency services or by
regulating those people who provide health care services. The effectiveness
standard does not appear to be an issue when the health care service is
recognized as charitable.
i) Providing health-related emergency services
Emergency services promote health when they protect an
individual from injury or death. Paragraph 41 provides examples of purposes
that promote health by offering emergency services, such as: “Promoting health
by providing publically available ambulance or paramedic services.” Paragraph
42 lists examples of activities that further the purpose, which includes the
“hiring and training [of] employees.”
ii) Regulating health care service providers
Regulating health care providers can be a promotion of
health purpose because it can protect people’s access to quality services.
When regulatory bodies for health care providers are governed by Canadian
legislation, then it is implied that the activities further charitable
purposes. On the other hand, groups or associations that aim to benefit its
health care provider members may not qualify as charities.
d) Health care products
A promotion of a health purpose is also possible when
supplying health products to people who medically require the health products
to treat a mental health or physical health condition. However, the products
must meet the effectiveness, quality and safety standards described above. An
example of a charitable purpose that promotes health by offering health care
products is: “Promoting health by providing affected populations with health
care products that prevent or relive a health condition” (Para 49). An
activity that could further this purpose may include the “buying and
distributing of drugs or medical devices for use inside or outside Canada”
(Para 50).
C. SPECIAL TOPICS
In addition to the four main groups of
charitable purposes that promote health described above, the Guidance provides
an overview of various “special topics” that may be considered charitable
purposes that promote health and to which special considerations may apply.
These special topics include: (1) complementary or alternative health care; (2)
physical fitness and wellness; (3) providing information as a charitable
activity; (4) providing medical clinics; (5) Providing health care services in
underserviced areas or areas of social and economic deprivation; and (6)
charging fees.
1. Complementary or alternative health care
If the complementary or alternative health care services
and products are recognized under the Canada Health Act or
provincial/territorial medical insurance plans, then only the standards for
quality and safety must be demonstrated. A list of examples is provided in
paragraph 54, which includes natural health products, meditation, and Chinese
medicine.
2. Physical fitness and wellness
Although promotion of sport is not charitable at common
law, encouraging and facilitating physical fitness and public participation in
fitness may be a promotion of health purpose. The programs and activities must directly lead to physical fitness and must be available to the public.
For example, it would be acceptable for an organization to provide physical
activity programs to children. Yoga and meditation, for example, may further
the promotion of health purpose when they can be shown to reduce the symptoms
of an illness. However, programs that aim to improve quality of life by
targeting general well-being are not charitable. Encouraging physical fitness
may often advance the core health purposes, such as when the purpose protects
the public health by preventing the occurrence of influenza.
3. Providing information as a charitable activity
Health information can be a promotion of a health purpose
only if it allows the public to perform behaviours that further the charitable
purpose. An activity that offers health information to the public is an
acceptable charitable purpose provided that it satisfies the requirements for
the content, audience and distribution, as described in paragraph 64. The
health information must be truthful and detailed, must enable the audience to
act in ways that promote health, must target the appropriate audience, and must
in fact reach the intended audience. In certain cases it may be acceptable,
when the audience and distribution requirements are met, for the health
information to direct readers to the charity’s resources that do satisfy the
content requirements. When information is already publically available, the
organization must add to the existing content, because then the organization
would be carrying out its own charitable activities, as required for
registered charities. The mere recirculation of existing data without the
organization’s input would need to be justified to CRA if it is more than
incidental.
4. Providing medical clinics
A medical clinic may be charitable, but it must provide
services to the public as a whole. It is possible to limit services to
particular people when this restriction is necessary for the charitable
purpose. For instance, a medical clinic that specializes in prostate cancer
may accept only male patients with this health condition. The clinic must not
provide any “unacceptable private benefit”, such as unreasonably high
salaries.
5. Providing health care services in underserviced
areas or areas of social and economic deprivation
Although it is unacceptable to provide a more than
incidental private benefit, what is incidental varies in different
circumstances based on the facts of each case. CRA may therefore allow a
different standard for services that are provided in underserviced and deprived
areas based on an expanded view of acceptable private benefits in such areas.
6. Charging fees
Charities can charge fees for health care services or
products, but they may not have a profit-making intention. The fees should not
exclude members of the public; otherwise it will not provide the necessary
public benefit. However, if fees are charged, CRA will assess based on the
facts and factors stated in paragraph 78, such as whether the charges are
reasonable.
D. health-related activities that further other
charitable purposes
There are health-related activities that can further the
other charitable purposes, which include the relief of poverty, advancement of
education and advancement of religion.
1. HEALTH-RELATED ACTIVITIES THAT FURTHER OTHER CHARITABLE PURPOSES
There are health-related activities that may provide
relief to the poor, such as by “providing eye glasses in developing countries”
(Para 83). These health activities would further the relief of poverty
purposes.
2. Health-related activities that further
advancement of education purposes
Health-related activities can further the advancement of
education purpose when the activities are structured, have a teaching or
learning component, and attempt to educate an audience. An example of a
health-related activity that furthers the advancement of education is the
teaching and training of medical health professionals. When organizations teach
about health care services and products, those services and products must meet
the effectiveness, quality and safety standards. Health-related research can
also further this purpose, such as a clinical trial of medical drugs.
3. Health-related activities that further advancement
of religion purposes
The advancement of religion means “manifesting, promoting,
sustaining and increasing belief” in a religion with faith in a higher power,
worship, and a system of doctrines and observances (Para 92). In order to be
charitable, the activity must be clearly and materially connected to the
religion’s attributes. The Guidance recognizes that health care may further
the advancement of religion purpose and this is a welcomed development for the
religious sector. Health-related activities can further the advancement of
religion purpose in two ways: (1) when the provided health care is an activity
that promotes the teachings of the religion; or (2) when the health care serves
religious staff members, in support of their religious contributions.
E. APPENDIX A: THE EFFECTIVENESS STANDARD REQUIREMENTS
An organization must be able demonstrate that the health
care services and products used to treat health conditions are in fact
“effective” at eliminating or reducing the condition’s symptoms (Para 1).
Appendix A describes the requirements relating to the effectiveness of health
care services and products, and provides questions to help an organization
figure out whether its services and products satisfy the effectiveness
standard.
F. APPENDIX B: THE QUALITY AND SAFETY STANDARDS FOR HEALTH CARE SERVICE PROVIDERS
An organization must be able to demonstrate that its
health care service providers are offering appropriate and safe services.
Appendix B describes the quality and safety standards for health care providers
and provides questions to help an organization evaluate its health care service
providers. For example, a health care service provider that is currently
licensed and in good standing with a professional regulatory body in Canada
will meet the relevant quality and safety standards.
G. APPENDIX C: THE QUALITY AND SAFETY STANDARDS FOR HEALTH CARE PRODUCTS
An organization must be able to demonstrate that its
health care products satisfy the quality and safety requirements. Appendix C
provides questions to help an organization evaluate the safety and quality of
its medical devices, drugs, and natural health products. For example, medical
devices that appear on the Medical Device Active Listing and that are not
subject to any recalls, advisories or warnings will satisfy the quality and
safety requirements. Drugs and natural health products must meet similar
requirements for quality and safety standards.