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CRA Got Few Complaints About Charities' Politics Prior To 2012

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CANADA REVENUE AGENCY
Canada Revenue Agency | CP
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OTTAWA — Very few Canadians had complained about the political activities of charities before the Conservative government announced plans to audit more charitable groups, newly released data shows.

In a document tabled in the House of Commons Thursday, the Canada Revenue Agency (CRA) said it received 20 complaints about the political activities of charities in 2008-2009, 27 complaints in 2009-2010 and 25 complaints in 2010-2011.

In 2011-2012, however, the number of complaints jumped to 139. That was around the time then-natural resources minister Joe Oliver called environmentalists “radicals” and Conservative Senator Nicole Eaton urged a Senate investigation into what she said were foreign foundations spending millions “masquerading as charitable donations."

After the federal government pledged $13.1 million in additional funding over five years to focus on the political activities of charities, 159 complaints were lodged. While the numbers went down last year to 52, they were back up again with 79 complaints lodged in the first seven months of this fiscal year.

Liberal MP Hedy Fry, who asked the government for the information, said she couldn’t say for sure what had caused the jump in complaints. But she said the data raised “red flags.”

“If you wanted to be fair and objective, you would say that they suddenly announced that they were going to put extra money and people might have said ‘Oh I didn’t know there were those things, I didn’t know we could complain,’ and that caused a jump,’” she said.

“Or, one could be cynical and say, hey maybe there was a fix going on.”

Tim Gray, executive director of Environmental Defence, told The Huffington Post Canada that local auditors had begun a routine CRA audit in early 2011 when suddenly — around the time of Oliver and Eaton’s comments — the file was sent to Ottawa.

“The tone changed very dramatically,” he said.

“At the time, in late 2011, the communications from the auditors was that our audit was almost complete, we’d be getting a letter, there was no major concerns,” Gray said.

“Then in July of 2012, about seven months after that communication, we received a letter that said that most of our programming was, in their view, not charitable.”

Gray said the two drastic interpretation were based on the same files under review. He said there had been no further communication between CRA and Environmental Defence and no further visitation with auditors between those two conversations.

Environmental Defence is currently appealing the CRA’s decision that its programming is not charitable. Gray says if they lose their appeal and the group is stripped of its charitable status, they will likely appeal the decision in court.

“The precedent for the environmental movement would be pretty devastating, so we would probably challenge it in court,” Gray said.

“From what our lawyers tell us, [the CRA] can just make assertions and they don’t have to base it on evidence or any kind of established fact. You’re guilty, until you prove yourself innocent. It’s the just the way tax-law is,” he added.

No charity has yet seen its charitable status revoked as a result of the political activity audits arising from Budget 2012.

The complaint against Environmental Defence was filed by Calgary law firm Jensen Shawa Solomon Duguid Hawkes LLP on behalf of Ethical Oil. Ethical Oil was originally headed by Alykhan Velshi, a former senior staffer in Jason Kenney’s office who left the lobby group a few months after he started it to take up a senior position in Prime Minister Stephen Harper’s office.

Gray said he believes there was an “organized effort” by individuals with strong links to the PMO and Kenney’s office to influence the CRA’s auditors by spurring complaints against environmental organizations. Another former Kenney staffer named Jamie Ellerton also worked for Ethical Oil.

The CRA wouldn’t comment on the Environmental Defence audit, citing confidentiality provisions in the Income Tax Act. Spokeswoman Jennifer McCabe said the agency screens for potential compliance issues related to political activities by using its own files and relevant publicly available documents, such as concerns or complaints from the public.

“The process for identifying which charities will be audited for any reason is handled by the charities directorate of the CRA alone in a fair and consistent way,” she said.

The director general of the charities directorate, Cathy Hawara, has also said her directorate is “not subject to political direction.”

Because the CRA won’t reveal who the complainants are, it is difficult to determine whether or not the process is being manipulated for political reasons, Fry said.

Last month, Friends of Science, a group that doesn't believe carbon dioxide emissions cause global warming, asked its supporters to complain to the Canada Revenue Agency about the activities of the Alberta Wilderness Association.

However Graham Milner of Canada Without Poverty, a registered charity, told HuffPost that he doesn’t believe complaints have anything to do with the political activity audit his group has been undergoing for the last three years.

“The way that they framed it to us was that it’s a routine procedure,” he said.

So far, 53 charities have been identified for political activity audits. Forty audits are still ongoing and 13 cases have been closed, according to CRA data released to HuffPost and to Parliament.

Several audits have dragged on for years. Of the 13 completed audits, one audit took more than four years to finish, another took almost three years. On average, each audit took nearly a year and a half to complete.

Environmental groups who have gone through the process say it is expensive and time-consuming, especially for smaller organizations that don’t have the manpower or the budget. They say the audits prevent their charities from doing their regular work.

The CRA said it doesn’t track the expenditures of every audit separately. Since 2012-2013, the Agency said it has sent 38 reminder letters to charities about possible areas of non-compliance. The CRA said it only began tracking the number of reminder letters issued in fiscal year 2011-2012.

Charities are only allowed to spend 10 per cent of their time and money on political activities.

Critics, such as Fry, however, believe the CRA is preventing groups from advocating policies the government is not interested in hearing about, such as environmental causes, social justice causes and LGBT issues.

“A lot of charitable organizations have said they think it’s a witch hunt and that’s why we asked the questions,” she said.

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