CCA Bulletin 33/07

October 10, 2007

Supreme Court Decision A Relief to Charities

Just the Facts

On Friday October 5, 2007, the Supreme Court of Canada released its decision on the case of the Amateur Youth Soccer Association. The case revolved around the quest by this Ontario based organization to be recognized as a charity.

The Revenue Canada Agency had rejected the application for charitable status on the basis that sports were not a charity. The Association appealed to the Federal Court of Appeals citing the provisions within the Income Tax Act for Registered Canadian Amateur Athletic Associations (RCAAA) as a rebuttal to the position that sports were not a charitable activity.

The Federal Court heard the case an upheld the position of the Revenue Canada Agency. But it also went somewhat farther when it contended that the creation of the RCAAA provisions within the Income Tax Act meant that Parliament intended to restrict charitable status to these national organization, thus precluding charitable status for local and provincial sporting organizations.

The Federal Court ruling created some understandable anxiety within the arts sector due to similar provisions within the Income Tax Act for national arts service organizations. With the support of the Muttart Foundation, the Federal Court’s decision was appealed by Imagine Canada, the umbrella organization for thousands of non profit and charities, with the Canadian Conference of the Arts a recognized party to the appeal since, if the Supreme Court upheld the Federal Court position, the charitable status for hundreds of arts organizations could indeed have been in jeopardy.

While the Supreme Court did not reverse the decision of the Federal Court of Appeal denying registered charitable status to the Amateur Youth Soccer Association, it rejected the interpretation of the provisions restricting charitable status to only those organizations that satisfy the criteria within the Income Tax Act for Registered Canadian Amateur Athletic Associations.

This decision by the Supreme Court therefore removes the threat of a more restrictive interpretation of charitable status for local and provincial arts organizations. It is a welcome ruling by Canada’s highest court.

Tell Me More

Supreme Court decisions are supported by extensive research and analysis not only of legislation but also case law and an attempt to understand the intent of Parliament in enacting provisions within any piece of legislation.

In this decision, the Supreme Court goes to the very roots of charitable status in quoting from the Charitable Uses Act of 1601 (Elizabeth I). A modern English rendition is provided in the decision listing various activities deemed to be charitable,

“ ….relief of aged, impotent, and poor people; the maintenance of sick and maimed soldiers and sailors, schools of learning, free schools, and scholars in universities, repair of bridges, ports, havens., causeways, churches, sea banks and highways, the education and preferment of orphans, the relief, stock or maintenance of houses of correction, marriages of poor maidens, supportation, aid, and help of young tradesmen, handicraftsmen, and persons decayed, the relief or redemption of prisoners or captives and the aid and ease of any poor inhabitants concerning the payments of fifteens, setting out soldiers and other taxes.”

The decision reviews precedents in other countries operating under common law that draws its charitable provisions from the Charitable Uses Act of 1601, as well as other innovations that bring some currency to the framework for determining charitable purposes.

The decision dismisses both the application for charitable status by the Amateur Youth Soccer Association and the broader interpretation of the Revenue Canada Agency of the restrictive impact of the RCAAA provisions within the Income Tax Act.

“12. It is clear from the wording of the definition of the RCAAA in s. 248(1) that Parliament intended the benefit of RCAAA status to be available only to nationwide associations, However, I have difficulty accepting the government’s “occupied field” argument based on excerpts from Hansard, While Hansard may offer relevant evidence in some cases, comment of MPs or even Ministers may or may not reflect the parliamentary intention to be deduced from the words used in the legislation. (...)

13. In any event, there is nothing in the passages cited by the government to indicate that the creation of the RCAAA regime precluded the registration of other sports associations as charities.”

Arts organizations that have obtained charitable status will be relieved by the decision and the solid analysis that supports it evident in the text of the ruling.

The text of the entire decision can be found here.