Previously, I wrote a post about how the leading charity law case, Income Tax Special Commissioners v. Pemsel, requires Scottish charities to conform with English common law. I compared this with Canada's exclusion of Quebec civil law, and its concept of 'bienfaisance,' in determining the meaning of charity in Canada.
Being in Scotland this week when the news is dominated by the transition in leadership of the Scottish Nationalist Party convinces me that the Scots are keen to obtain independence from Great Britain. They increasingly resent the extent to which English tax law dictates the funding realities of Scottish charities.
The issues are not simply national pride or politics. The Scottish legal definition of charity contains a concept superior to the English common law definition which Canada would do well to follow. Canada Revenue Agency, the Canadian courts and policy experts such as The Pemsel Case Foundation should unchain Canadian charity law from the 1891 Pemsel case which does not consider "disbenefit".
The charity test set out in Scotland's Charities Act in 2005 adds a negative concept to the "public benefit" test. The courts must consider and balance whether any "disbenefit incurred or likely to be incurred by the public" outweighs the public benefit to be provided by the charity.
The importance of considering disbenefit is obvious when one puts the public benefit of religion in counterbalance with the evils of ostracizing family members through shunning. Disbenefit provides a legal pathway to exclude charities which promote and romanticize extremist jihad from a charity law regime which recognizes and empowers Islam.
Our world is increasingly polarized and inclined to passionately proclaim only the black and white. When deciding what level of public benefit is required to be accorded charity status, it is important to introduce a dispassionate examination of the grey.
The practice of evaluating disbenefit would also provide an alternative to the political activities audits currently being carried out by Canada Revenue Agency. Rather than the Director-General of CRA's Charity Directorate considering the political leanings of charities selected for audits, she could instead initiate a review of disbenefit.
It is legitimate to weigh the alleged disbenefits of loss of jobs and tax revenues against the benefits of protecting our environment, even when the issue is as contentious as the oil sands. Canada would have a much better public policy discussion of the issues if we weighed benefits against disbenefits in an adult, even if not dispassionate, conversation. This makes more sense than CRA launching a witch hunt based upon assumptions made about a charity's political leanings.
Subsequent to the passage of Scotland's Charities Act, the concept of disbenefit has entered the jurisprudence of charity law in England. However, that is not common law in the tradition of Pemsel because the English courts are now considering a specific modern English statutory definition of charity, rather than the meaning in common law.
If the definition of charity can be improved by examining Scotland's law, certainly there is merit in looking to the civil law of Quebec for concepts that could enhance the meaning of charity in Canada. Unfortunately, in spite of the fact that Canada is a bijural country, the Supreme Court of Canada has excluded that possibility by holding: "specific statutory definitions of charity in provincial legislation and decisions dealing with that definition do not dictate the meaning of charity under the Income Tax Act."
The Supreme Court of Canada has moved away from the common law tradition of enabling courts to evolve new charitable purposes by analogy to previously recognized purposes. Instead, any change that is more than incremental has to be legislated by Parliament.
Consequently, it is no longer adequate for Canada to limit the development of the meaning of charity to the common law evolving in the Pemsel tradition. Parliament must liberate the charitable sector from these limitations and also enhance our law by adopting the concept of disbenefit from Scotland. It should also enrich Canada's concept of charity by respecting Quebec's civil law concept of bienfaisance.
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