Court Declares Not-for-Profit Cemetery to be a Charitable Trust
Jan 2019 Charity & NFP Law Update
known as Mount Pleasant Group of Cemeteries (“MPGC”). It operates ten cemeteries and numerous crematoria, mausoleums, and visitation centres in the Toronto area. In addition, it has an affiliated funeral home business which operates on its cemetery lands. The court uses the term “director” and “trustee” interchangeably in the decision. This bulletin uses the word “director” for consistency except when the word “trustee” is used in a quote from the decision.
The applicants consisted of an individual, Ms. Wong-Tam, and a non-profit corporation, Friends of Toronto Public Cemeteries Inc, which is comprised of approximately 100 members who are residents in the Mount Pleasant Cemetery area. In finding that MPGC was a charitable trust whose directors had not been validly appointed since 1987, and that some of MPGC’s operations exceeded the terms of the trust, the court looked to historical trust and corporate documents of MPGC.
For the balance of this Bulletin, please see Charity & NFP Law Bulletin No. 439.
Legislation Update
Jan 2019 Charity & NFP Law Update
Royal Assent Received for Bill C-86, Budget Implementation Act 2018, No.2
On December 13, 2018, the omnibus Bill C-86, Budget Implementation Act 2018, No. 2 received Royal Assent, making highly anticipated changes to the political activities rules for charities under the ITA. As indicated above, Bill C-86 amends section 149.1 of the ITA by repealing the term “political activity” under subsection 149.1(1) and introducing the concept of “public policy dialogue and development activities,” as a permitted charitable activity. These amendments are now in force, and may apply retroactively as far back as 2008. The CRA’s interpretation of public policy dialogue and development activities is discussed in more detail above in Charity & NFP Law Bulletin No. 438.
Bill C-86 will also amend the Trade-marks Act, although these amendments do not have a set coming into force date yet. Of particular interest to charities, these amendments include limiting enforcements without use in Canada, as well as simplifying the process by which official marks can be invalidated and removed from the Register. For further details on the Bill C-86 amendments to the Trade-marks Act, see More Changes to Trademark Law That Will Impact Charities and NFPs, below.
Proposed Amendments to Immigration and Refugee Protection Regulations, SOR/2002-227
On December 15, 2018, regulations proposing amendments to the Immigration and Refugee Protection Regulations, SOR/2002-227 (“Immigration Regulations”) were published in the Canada Gazette. These amendments are intended to provide protection for migrant workers, which may include charitable and religious workers under Canada’s International Mobility Program (“IMP”) who are experiencing abuse or are at risk of abuse by their employers. More specifically, migrant workers who are issued employer-specific work permits (“ESWP”), which restrict their ability to work in the country to the employer named on their permit, may be deterred from reporting employer abuse because investigations into abuse could lead to a ban on the employer from employing migrant workers, thereby resulting in migrant workers with ESWP’s facing financial burden and risk of deportation.
When the regulations come into force, the Immigration Regulations will be amended to allow “migration officers” to issue open work permits to migrant workers with ESWP’s and their families who are in Canada if there are reasonable ground to believe that the migrant worker is experiencing employer-abuse or is at risk of abuse. Providing an open work permit will allow the migrant worker to work for any employer in the country and therefore avoid the risk of deportation. Further, the regulations will amend the IPRP to provide an exemption from the $155 work permit processing fee.
British Columbia Speculation and Vacancy Tax Act and Regulation 275/2018
On November 27, 2018, British Columbia’s Speculation and Vacancy Tax Act received Royal Assent. In general terms, the Act requires the owner of a residential property to pay a yearly tax to the government in accordance with a provided formula, except in accordance with exemptions outlined in the Act. The Act defines “residential property” generally to include properties assessed as class 1 residential properties. Section 20 of the Act, in particular, exempts registered charities, as well as associations as defined under the Cooperative Association Act. Not-for-profits may also be exempt from the tax, provided that: 1) they hold the residential property “other than as a partner in a partnership or as a trustee of a trust” and 2) the property is “primarily used for a prescribed purpose.” Such purpose is prescribed in BC Regulation 275/2018, which came into effect on December 10, 2018, and provides that the property owned by the not-for-profit must be used for a charitable purpose.
“PPDDA” In, “Political Activities” Out: CRA’s New Draft Guidance on PPDDA Open for Comment
Jan 2019 Charity & NFP Law Update
On December 13, 2018, the omnibus Bill C-86, Budget Implementation Act, 2018, No. 2 (“Bill C-86”) received Royal Assent and modified the rules in the Income Tax Act (“ITA”) concerning “political activities” by registered charities and registered Canadian amateur athletic associations. In doing so, Bill C-86 removed reference to political activities from the ITA, including the quantitative limits on non-partisan political activities in particular, and instead introduced the concept of “public policy dialogue and development activities” (“PPDDAs”). Although the Bill C-86 amendments were well received by the charitable sector, they did not include a definition of PPDDAs. In the wake of the amendments, the Canada Revenue Agency (“CRA”) released a substantive and carefully written draft administrative guidance CG-027, Public policy dialogue and development activities by charities (the “Draft Guidance”) on January 21, 2019, shedding some light on its interpretation of PPDDAs and how it may administer the new rules. Further information on Bill C-86’s application to political activities and PPDDAs has also been published by the CRA on a new Questions and Answers webpage, released simultaneously with the Draft Guidance (“PPDDA Q&A”). This Charity & NFP Law Bulletin provides a summary of the Draft Guidance and its impact on charities.
For the balance of this Bulletin, please see Charity & NFP Law Bulletin No. 438.
Update on Special Senate Committee on the Charitable Sector
Jan 2019 Charity & NFP Law Update
Committee Mandate Extended until September 30, 2019
During its November 29, 2018 sitting, the Senate approved the motion by members of the Special Senate Committee on the Charitable Sector (the “Committee”) to extend the period to study and report on the impact of federal and provincial laws and policies governing the charitable and not-for-profit sector from the previously set deadline of December 31, 2018 until September 30, 2019.
In support of the motion, Committee member Honourable Senator Ratna Omidvar explained that the Committee requires an extension to ensure that its final recommendations “reflect the scope, depth and complexity” of the Committee’s work. In that regard, the Committee requires additional time to conclude an online survey sent to hundreds of charities and not-for-profits across Canada, including processing the results of the survey which need to be tabulated, analyzed and synthesized into the Committee’s final report. Senator Omidvar also noted that the extension would allow the Committee to review Bill C-86 which includes proposed amendments to the ITA that alter the extent to which registered charities can engage in what were formerly called non-partisan political activities, but under Bill C-86 will be referred to as “public policy dialogue and development activities.” Senator Omidvar also noted that other areas requiring further work by the Committee include issues relating to the creation of a permanent advisory committee on the charitable sector within the CRA, an investment in new social finance funds, both of which were referred to in the 2018 Fall Economic Statement and discussed in Charity & NFP Law Bulletin No. 435, as well as a new provision to allow non-profit journalism and journalistic organizations to issue official donation receipts.
Committee Meetings of December 2018
In December 2018, the Committee continued its study on the charitable and not-for-profit sector with two meetings on December 3, 2018 and December 10, 2018, which focused on “advocacy and political activity as it relates to charities and non-profit organizations.” Minutes of each meeting are available on the Committee website.
The December 3 meeting included comments urging the Committee to support the passage of Bill C-86 to affirm the importance of allowing charities to engage in public policy dialogue without fear of loss of charitable status in pursuit of charitable purposes, issues relating to the Canada Without Poverty decision, and the changes subsequently proposed by Bill C-86, which has now received Royal Assent. The general consensus from the witnesses was that the approval of Bill C-86 was a positive development.
The December 10 meeting covered issues relating to the importance of permitting lobbying and communication with elected officials without restriction where the subject matter relates to the charity’s charitable purpose, a proposal to permit charities to carry on any type of revenue generation so long as the proceeds are used to further its charitable purpose. It was also suggested that the requirement that charities must carry out their “own activities” be removed given the enormous administrative burden that arises to draft complex agreements to meet this requirement even though there is little evidence of any harm being prevented, and discussion on whether the disbursement quota could be set by regulation rather than in the ITA to provide flexibility to charities subject to market conditions and interest rates. The Committee also discussed how the sector is changing with the use of social media, crowdfunding and social enterprise, as well as certain modern legislation, such as Saskatchewan’s legislation on informal public appeals, which governed issues relating to the funds raised to assist the victims of the Humboldt Broncos accident, but which legislation is not available in any other provinces.
Final Order Involving the Humboldt Broncos’ Crowdfunding Campaign
Jan 2019 Charity & NFP Law Update
On November 28, 2018, the Saskatchewan Court of Queen’s Bench released its Final Order involving the allocation of the funds raised through the GoFundMe online crowdfunding campaign for the benefit of the victims of the April 6, 2018 accident involving twenty-nine individuals, including members of the Humboldt Broncos junior hockey team (the “Campaign”). As discussed in the October 2018 Charity and NFP Law Update, the application by the Humboldt Broncos Memorial Fund Inc. (“HBMFI”) was made pursuant to Saskatchewan’s The Informal Public Appeals Act (“IPAA”) and the Canada Not-for-profit Corporations Act (“CNCA”).
In its Final Order, the Court accepted the report of the Advisory Committee previously appointed on August 15, 2018 and whose recommendation the HBMFI also accepted. Taking note of the survivors’ wishes that they all benefit equally regardless of their medical condition, the report from the Advisory Committee recommended that the funds be allocated among three different groups of beneficiaries: a) the families of the 16 persons who died in the accident; b) the 13 surviving claimants, and c) “any remaining funds in trust to the 13 surviving claimants in equal shares, share and share alike.”
As more online crowdfunding campaigns continue to be used for raising funds for both charitable and non-charitable objects, and even though the IPAA is unique legislation only applicable in Saskatchewan and does not apply to qualified donees as defined under the ITA, this case provides an interesting precedent for the distribution of funds raised through crowdfunding campaigns. Charities and not-for-profits in other parts of Canada will also want to monitor whether, in the coming years, other provinces decide to adopt comparable legislation to that currently in place in Saskatchewan.