PEN Canada

What Happened

Since January 2013 PEN Canada has filed four access to information (ATI) requests in an effort to understand how the Canada Revenue Agency (CRA) interprets the prohibition on “partisan political activity” set forth in ss. 149.1(6.1) and (6.2) of the Income Tax Act,1 and how the CRA decides to send charitable organisations reminder letters regarding their political activity.2 The impetus for PEN Canada’s involvement was a reminder letter received by Canadian Mennonite Publishing Service (“Canadian Mennonite”) in July 2012, which PEN Canada suspected was part of a pattern of targeted reminder letters and audits of charitable organisations critical of the Conservative government.3 In response to their ATI requests, the CRA has responded slowly, exceeding thirty-day statutorily imposed deadlines4 as well as sixty-day extensions the CRA required. Moreover, when the CRA did respond, the key aspects of the requested documents were redacted or severed. On April 9, 2014, PEN Canada received a letter from the CRA indicating that they too would be audited for their political activity.5


Background6

On January 3, 2013, PEN Canada filed its first ATI request with the CRA, asking for a list of all charitable organisations which had received reminder letters for their political activity since 2006 (ATI Request A), as well as all records relating to the decision to send a reminder letter to Canadian Mennonite (ATI Request B). On February 1, 2013, PEN Canada filed a third ATI request, this time for already-released records related to the CRA’s enforcement of restrictions on charitable organisations’ political activity (ATI Request C).

On January 31, 2013, the CRA informed PEN Canada that it was not in possession of the names of all organisations which had received reminder letters since 2006. The analyst was able to disclose that nine organisations had received such letters between April and December 2012, but could not breach confidentiality to reveal their names. ATI Request A was thus considered “closed”. Unsatisfied with that response, PEN Canada filed a fourth ATI request on February 5, 2013, which asked for records related to the decision to send reminder letters to the nine charitable organisations referred to by the CRA (ATI Request D). In addition, PEN Canada asked for “basic information” about the nine charities which had received letters.

On March 11, 2013, PEN Canada received a letter from the CRA indicating that the CRA would need a sixty-day extension on the thirty-day statutorily imposed time limit to meet ATI Request B. On March 15, 2013, PEN Canada received another letter from the CRA indicating that they also needed a sixty-day extension for ATI Request D. On July 9, 2013, PEN Canada filed a complaint with the Information Commissioner of Canada with respect to ATI Requests B and D, for which they had still not received a response (Complaint #1).

The CRA did not confirm receipt of ATI Request C until May 6, 2013, when it sent PEN Canada already-released records from a request made by another party in 2012. These records included sections on “Activity-based Compliance Issues” and “Specific Audit Guidelines on political activities.” However, most relevant examples of partisan political activity had been redacted from the documents pursuant to s. 16(1)(c) of the Access to Information Act (“ATIA”). Section 16(1)(c) permits refusals to disclose information where such information “could reasonably be expected to be injurious to the enforcement of any law of Canada.”

On August 1, 2013, the CRA responded to ATI Request D by indicating that they could not release information related to the decision to send reminder letters to the nine organisations, as PEN Canada was not an authorised representative of the organisations. Moreover, the CRA was unable to specify the type of charity reflected among the nine organisations because they claimed not to classify information in this manner. Yet, as PEN Canada points out, information is categorised in this manner on the CRA website itself. Finally, the CRA provided a copy of its “Reminder Letter Guidelines” and “Reminder Letter Procedures,” but the criteria used to determine when to issue reminder letters was redacted pursuant to s. 16(1)(c) of the ATIA.

On September 16, 2013, PEN Canada submitted a second complaint (Complaint #2) to the Information Commissioner, in which they expressed dissatisfaction with the response they received from the CRA in relation to ATI Request D on August 1, 2013.

On November 25, 2013, PEN Canada received a response from the CRA with respect to ATI Request B. In their response, the CRA included the “Reminder Letter Guidelines” and “Reminder Letter Procedures” that they had transmitted in response to ATI Request D on August 1. Again, however, all relevant political activity examples were redacted pursuant to s. 16(1)(c) of the ATIA. Moreover, all seventeen pages of information related to Canadian Mennonite had been completely severed pursuant to ss. 19(1) and 24(1) of the ATIA.

On November 26, 2013, PEN Canada telephoned the CRA for a more detailed explanation. With respect to the redaction pursuant to s. 16(c), the CRA agent told PEN Canada that “[if the examples of partisan political activity were not redacted], charities would know which activities to avoid and therefore it would be difficult for the CRA to identify those charities that were in violation.” With respect to the severing pursuant to ss. 19(1) and 24(1) of the ATIA, the analyst informed PEN Canada that the information likely contained taxpayers’ personal information.

On December 18, 2013, PEN filed a third complaint with the Information Commissioner of Canada (Complaint #3). This time, they alleged that the CRA’s response on November 25, 2013, in relation to ATI Request B, was insufficient. Charitable organisations, they argued, should be aware of the criteria pursuant to which they were being assessed for the issuing of reminder letters. Moreover, they explained in the complaint, personal taxpayer information in the severed material could have been redacted rather than the documents entirely severed.

On December 23, 2013, the CRA followed up on its response to ATI Request B on November 25, 2013, by sending another severed document. This time, the information was severed pursuant to s. 16(c) of the ATIA.

PEN Canada filed a fourth complaint with the Information Commissioner of Canada on January 6, 2014 (Complaint #4), highlighting its reasons for requesting the information and complaining about the perceived insufficiency of the CRA’s responses to date. In March 2014, a representative from the Information Commissioner communicated with PEN Canada to inform them that the investigation into their complaints was ongoing. PEN Canada now has three outstanding complaints with the Information Commissioner. On September 6, 2013, and January 6, 2014, the Information Commissioner responded with the results of its investigation into Complaint #1. The Information Commissioner held that that the CRA had been in a state of deemed refusal to provide information with respect to ATI Requests B and D, but that the CRA’s subsequent responses resulted in the resolution of the complaint.

On April 9, 2014, PEN Canada received a letter from the CRA informing them that they would be audited for their political activity. In response to the media attention associated with the audit of PEN Canada and other charitable organisations, the federal New Democratic Party requested a special summer meeting of the parliamentary Standing Committee on Finance in order to address allegations of selective auditing.7 At the meeting, the Conservative members of the committee used their majority to ensure that it was held in private.8 The committee reportedly does not intend to study the allegations any further.9

Relevant Dates

  • November 19, 2012 – PEN Canada expresses concern that the reminder letter received by Canadian Mennonite reflects a growing trend in which the CRA appears to be stifling the expression of charitable organisations.
  • January-February 2013 – PEN Canada files four ATI requests with the CRA in order to better understand how it monitors “partisan political activity”, and how it decides to send charitable organisations reminder letters about their political activity.
  • May 6, 2013 – PEN Canada receives CRA documents on “Activity-based Compliance Issues” and “Specific Audit Guidelines on political activities”. Most relevant examples of partisan political activity are redacted from the documents pursuant to s. 16(1)(c) of the ATIA.
  • July 2013 – PEN Canada files a complaint with the Information Commissioner of Canada, complaining about the CRA’s delay in responding to their two outstanding requests.
  • August 2013 – PEN Canada receives a response from the CRA with respect to one of their outstanding ATI requests. Examples of political activities which would trigger reminder letters from the CRA are redacted pursuant to s. 16(1)(c) of the ATIA.
  • November – December 2013 – PEN Canada receives responses from the CRA related to its last outstanding ATI request. Examples of political activities which would trigger reminder letters from the CRA are redacted pursuant to s. 16(1)(c) of the ATIA. All information related to Canadian Mennonite is completely severed pursuant to ss. 19(1) and 24(1) of the ATIA, probably because the documents contain personal taxpayer information.
  • January 6, 2014 – PEN Canada files its fourth complaint with the Information Commissioner of Canada, alleging the collective insufficiency of the CRA’s responses to PEN Canada’s requests for information. They had filed second and third complaints in September and December 2013.
  • March 2014 – A representative from the Information Commissioner of Canada informs PEN Canada that investigations into their complaints are ongoing.
  • April 9, 2014 – PEN Canada receives a letter from the CRA informing them that will be audited for their political activity.
  • August 2014 – A special meeting of the Standing Committee on Finance is called by the NDP in order to look into allegations of selective auditing. The meeting is held in private and there appear to be no plans to study the issue in greater depth.

 

1 RSC 1985, c. 1 (5th Supp).

2 PEN Canada, “How hard is it to get information on political activity from the CRA?” (1 August 2014), online: http://pencanada.ca/political-activity-atip-request/ (accessed 27 September 2014).

3 PEN Canada, “CRA Policy on Partisan Charities Stifles Debate” (19 November 2012), online: http://pencanada.ca/news/cra-policy-on-partisan-charities-stifles-debate/ (accessed 30 September 2014). Although a case study of Canadian Mennonite is featured on Voices, the case study ends in November 2012 with a sentence on PEN’s expression of concern and support for Canadian Mennonite’s cause.

4 See Access to Information Act, RSC 1985, c A-1, s. 7 [ATIA].

5 Dean Beeby, “Pen Canada hit with audit by Canada Revenue Agency, joining other charity groups critical of Harper government” (22 July 2014) Canadian Press, online: http://news.nationalpost.com/2014/07/22/pen-canada-hit-with-audit-by-can... (accessed 27 September 2014).

6 This section relies heavily on PEN Canada, “How hard is it to get information on political activity from the CRA?” (1 August 2014), online: http://pencanada.ca/political-activity-atip-request/ (accessed 27 September 2014). Unless otherwise cited, the information in Section B, “Facts”, was obtained from this source.

7 Dean Beeby, “CRA's charity audits prompt NDP call for summer meeting” (5 August 2014) Canadian Press, online: http://www.cbc.ca/news/politics/cra-s-charity-audits-prompt-ndp-call-for... (accessed 15 October 2014).

8 Kady O’Malley, “CRA charity audits: Committee has 'no plans' to look into alleged interference” (18 August 2014) CBC News, online: http://www.cbc.ca/news/politics/cra-charity-audits-committee-has-no-plan... (accessed 15 October 2014).

9 Ibid.

 

Role or Position

PEN Canada is a Canadian charitable organisation which is primarily concerned with censorship and freedom of expression issues. In particular, the organisation advocates for writers who face persecution as a result of their expressive activities. While PEN Canada has been critical of some of the current Conservative government’s policies, they have supported others, such as its decision to repeal the hate speech provision in the Canada Human Rights Act.1

1 Tasleem Thawar, “CRA Audits of Charities – What’s the big deal?” (12 August 2014) PEN Canada, online: http://pencanada.ca/blog/cra-audit-charities/ (accessed 27 September 2014).

 

Implications and Consequences

This paper addresses the implications and consequences flowing from three distinct but related issues raised by the facts above: (1) The insufficiency of the CRA’s responses with respect to how it characterises “partisan political activity” and decides to issue reminder letters to charitable organisations; (2) The CRA’s delays in responding to PEN Canada’s ATI requests; and (3) The CRA’s audit of PEN Canada, which fits into a pattern of selective auditing of charitable organisations critical of Conservative government policies.

Transparency and Democracy
If one of the foundations of democratic governance is openness and transparency,1 the CRA’s responses to PEN Canada’s ATI requests suggests that it is behaving in a disturbingly undemocratic manner. While the CRA’s position is that disclosing relevant examples of partisan political activity or revealing how it decides to issue reminder letters to charitable organisations would be “injurious to the enforcement” of the CRA’s mandate (s. 16(c) of the ATIA), PEN Canada rightly argues that it is impossible for charities to follow the rules on political activity if they do not know how partisan political activity differs from permitted political activity.2 Indeed, partisan political activity does not differ in an intuitive manner from the political activity towards which charitable organisations are permitted to devote up to ten percent of their resources; support for a particular policy could be interpreted as “indirectly” supporting a particular political party, and thus as partisan for the purposes of ss. 149(6.1) and (6.2) of the Income Tax Act and CRA enforcement.3 The CRA’s enforcement of charitable organisations’ political activity is ultimately Kafkaesque. Moreover, while the CRA cites personal privacy concerns (ss. 19(1) and 24(1) of the ATIA) for its refusal to disclose information specifically related to Canadian Mennonite, it could have furthered those protective purposes by redacting the personal information rather than severing the entirety of the documents.4

The delays with which the CRA has responded to PEN Canada’s requests for information also reflects a lack of transparency and raises democratic concerns. ATI Requests B, C, and D were each met with delays far longer than those permitted by statute or by the extensions that the CRA itself requested to provide the information. In the case of ATI Request C, the documents that PEN Canada requested had already been released pursuant to an ATI request by another party in 2012; the delay of several months in responding to the request thus seems entirely inexcusable.

Abuse of Process
With respect to the audit of PEN Canada and other charitable organisations, both the federal government and the CRA have consistently maintained that the CRA operates independently of government influence.5 In support of this position, the editorial board of the Calgary Herald has indicated that “there is no evidence for the hypercharged [sic] allegation that the Prime Minister's Office is directing the Canada Revenue Agency to target environmental charities and leftwing [sic] think-tanks.”6

While there may be no explicit, incontrovertible proof that the Conservative government is directing the CRA to audit specific organisations which oppose its policies, substantial circumstantial evidence does exist to suggest that the CRA has been warning and auditing charitable organisations based on their outspoken criticism of government policy. PEN Canada’s Executive Director, Tasleem Thawar, explains that there are over 85,000 registered charitable organisations in Canada.7 Fifty-two charities are currently undergoing audits for political activity, and among those who have publicised the fact that they are being audited, “many have been critical of government policy and action.”8 Thawar notes that “[i]t seems implausible that these have been selected randomly, or that the audits are routine.”9

Moreover, as Beeby explains, it is known that the CRA considers complaints about charities’ political activity in assessing which organisations to audit; it is also known that EthicalOil.org, an organisation founded by a current Conservative government aide and dedicated to supporting the Canadian energy industry, submitted a number of complaints to the CRA about environmental charities which were subsequently audited for political activity.10 This raises substantial concerns that the role of the complaint process in the CRA’s monitoring of charitable organisations is being abused as a political tool by those holding important positions of power. PEN Canada has been highly critical of the opacity with which the CRA has been operating and of what it perceived as selective auditing practices; now they too are subject to an audit.

Equality
Even if the CRA’s apparently selective auditing is the effect of an ostensibly neutral increase in the CRA’s auditing budget rather than reflective of a purpose to target specific political opponents, considerable equality concerns nevertheless remain. In the context of a s. 15 Charter analysis, for example, courts are concerned not only with discriminatory purposes but with discriminatory effects when assessing whether policies have infringed the constitutional right to equality.11 It seems clear that charitable organisations expressing viewpoints not aligned with the Conservative government are disproportionately subjected to CRA audits relative to other charitable organisations. In February 2015, media reports revealed that while the charity Dying With Dignity, which has been advocating for “right to die” legislation in Canada, has seen their charitable status annulled because their mandate was too political, other charities advocating for a larger place for the private market in Canadian healthcare have not been subject to an audit. "I looked around at what other charities are doing and I wonder how it is that many of them are charitable and now we're not," Wanda Morris, the CEO of Dying With Dignity, told the CBC. This has wide-ranging negative effects, as audits are expensive and time consuming. Moreover, as discussed below, the discriminatory effects extend to impacting charitable organisations’ free-expression interests.

Freedom of Expression
Some columnists have responded in defense of the CRA’s increased monitoring of charitable organisations for political activity, asserting that “[f]reedom of speech and tax deductible freedom of speech are not the same thing”12 and explaining that “nothing…prevent[s] [charities] from soliciting funds from donors who share their green and political passions regardless of whether or not they receive a charitable tax receipt, which is essentially a government subsidy.”13 The commentary reflects an attempt to construe the grievances of charitable organisations like PEN Canada as positive rights claims for government-subsidised political expression. It has the rhetorical effect of distorting and diminishing the substantial free expression concerns implicated here.

However, like the rights claimants in Transportation Authority v. Canadian Federation of Students — British Columbia Component,14 PEN Canada and other charitable organisations are not demanding that “the government support or enable their expressive activity by providing them with a particular means of expression from which they are excluded.”15 Rather, given that charitable organisations are permitted to devote up to ten percent of their resources to non-partisan political activity, their grievances more accurately reflect a demand to exercise their expressive interests “by means of an existing platform they are entitled to use – without undue state interference.”16 The CRA’s behaviour, in two important ways, gives rise to substantial concerns of undue interference with this negative right.

First, the CRA’s disproportionate monitoring – whether purposeful or by unintentional effect – of charities which have criticised government policies has contributed significantly to an “advocacy chill”17 among the charitable sector. Second, the CRA’s repeated refusals to clarify its interpretation of “partisan political activity” in response to PEN Canada’s requests creates a chilling effect in which charitable organisations are more likely to self-censor than risk unwanted attention from the CRA. Indeed, as PEN Canada has pointed out, the provisions on partisan political activity are so vague – they reference “indirect” support for political parties – that they could potentially be enforced in a manner so as to prohibit charitable organisations from discussing any political issues at all.18 Absent clarification from the CRA, and given circumstantial evidence of selective enforcement practices, charitable organisations are likely to self-censor even on non-partisan political issues towards which they are entitled to devote up to ten percent of their resources.

 

Published: Thursday, Feb. 12, 2015
Image: PEN Canada

 

1 See, for example, Canada (Information Commissioner) v. Canada (Minister of National Defence), 2011 SCC 25 at para 80, [2011] 2 SCR 306.

2 Kathryn Blaze Carlson, “Canada Revenue Agency refuses to divulge audit tactics targeting charities” (31 July 2014) Globe and Mail, online: http://www.theglobeandmail.com/news/politics/canada-revenue-agency-refus... (accessed 27 September 2014).

3 PEN Canada, “CRA Caution to Canadian Mennonite May be Part of a Pattern” (20 November 2012), online: http://pencanada.ca/blog/cra-threat-to-canadian-mennonite-the-latest-in-... (accessed 30 September 2014).

4 PEN Canada, “How hard is it to get information on political activity from the CRA?” (1 August 2014), online: http://pencanada.ca/political-activity-atip-request/ (accessed 27 September 2014).

5 Bill Curry and Kathryn Blaze Carlson, “Pen Canada receives support amid political audit” (22 July 2014) Globe and Mail, online: http://www.theglobeandmail.com/news/politics/pen-canada-receives-support-amid-political-audit/article19718358/#dashboard/follows/ (accessed 27 September 2014).

6 Calgary Herald, “CRA Audits are Fine” (6 August 2014), online: http://www2.canada.com/calgaryherald/news/theeditorialpage/story.html?id... (accessed 30 September 2014).

7 Tasleem Thawar, “CRA Audits of Charities – What’s the big deal?” (12 August 2014) PEN Canada, online: http://pencanada.ca/blog/cra-audit-charities/ (accessed 27 September 2014).

8 Ibid.

9 Ibid.

10 Dean Beeby, “Conservative government steps up scrutiny of charities' political activities” (10 July 2014) Canadian Press, online: http://www.theglobeandmail.com/news/politics/study-cites-chill-from-tax-... (accessed 27 September 2014).

11 R. v. Kapp, [2008] 2 SCR 483, 2008 SCC 41 at para 16.

12 Calgary Herald, “CRA Audits are Fine” (6 August 2014), online: http://www2.canada.com/calgaryherald/news/theeditorialpage/story.html?id... (accessed 30 September 2014).

13 Terence Corcoran, “Charities that don’t flout rules have nothing to fear from CRA audit” (28 July 2014) Financial Post, online: http://business.financialpost.com/2014/07/28/terence-corcoran-charities-... (accessed 30 September 2014).

14 2009 SCC 31, [2009] 2 SCR 295.

15 Ibid at para 35.

16 Ibid.

17 Dean Beeby, “Conservative government steps up scrutiny of charities' political activities” (10 July 2014) Canadian Press, online: http://www.theglobeandmail.com/news/politics/study-cites-chill-from-tax-... (accessed 27 September 2014).

18 PEN Canada, “CRA Caution to Canadian Mennonite May be Part of a Pattern” (20 November 2012), online: http://pencanada.ca/blog/cra-threat-to-canadian-mennonite-the-latest-in-... (accessed 30 September 2014).

 

Sources