CCA Bulletin 31/08

Ottawa, August 29, 2008

When “Contrary to Public Policy”,  is NOT Contrary to Public Interest:

the CCA makes amends

.

When the CCA developed its submission to the Canada Revenue Agency announced two days ago, the phrase “contrary to public policy” caught our attention. This phrase, also to be found in Bill C-10, has prompted widespread concern about the possibility of censorship or arbitrary judgments by Ministers or senior public servants. The CCA focused on this phrase in the proposed policy on fundraising by registered charities, echoing some of the same concerns voiced during the ongoing debate on C-10, a debate which may well outlive the life of the current Parliament.

Thanks to the diligence of noted tax policy expert and long time CCA friend Arthur Drache  C.M., Q.C., we can now explain why the use of “contrary to public policy” takes on a different coloration when used in reference to prohibited charitable activities. In his note to me, Arthur writes:

“I fear the CCA is barking up the wrong tree on the public policy issue vis a vis charities. The requirement not to offend “public policy” is a common law test which has been in place for several hundred years. I have litigated this issue on several occasions when the CRA tried to limit activities as being against public policy. Indeed, the CRA has never, to my knowledge, ever won such a case.

That having been said, taking the position that a charity can undertake works which offends public policy is absolutely wrong. It is this rule which, for example, precluded charities from transferring funds to South Africa during the apartheid regime.

I completely agree that the “public policy” part of Bill C-10 is wrong, not just because of what it implies but because they are not speaking about “public policy” in the technical legal sense…the charity sense.

Attached is an article I wrote earlier this year on the topic. I provided this to Senator Goldstein of the Banking Trade and Commerce Committee some months ago.”

The CCA appreciates the learned intervention by Arthur on this and apologizes for this error. We are in the process of revising the submission to the Canada Revenue Agency to reflect the new information provided to us.

Having said this, inserting the clause in the policy may give rise to more useless court cases and hassles for charities who, as their name indicates, have better things to do!