04/12/2015 05:00 EDT | Updated 06/12/2015 05:59 EDT

Revenue Canada Targets Steelworkers Charity For Political Activities


A union-backed charity that wants Canadian mining companies held accountable for overseas misdeeds is among the latest to be targeted by the Canada Revenue Agency for political activities.

The Steelworkers Humanity Fund Inc. is still awaiting a verdict from the agency, nine months after an auditor showed up at the Toronto office and hauled away several binders of sensitive material.

The fund, with about $1.3 million in annual revenues, has supported Canadian food banks and provided disaster relief abroad since its founding in 1985.

But the charity's support of the Canadian Network on Corporate Accountability or CNCA, to which it gave about $37,000 in 2013, appears to have piqued the agency's interest.

"We've been part of this CNCA, and no doubt that's part of the rationale" for the audit, Steelworkers president Ken Neumann said in an interview from Toronto.

"It's quite clear that it's targeted to folks that speak up sometimes against the government's policies."

The Canada Revenue Agency launched a series of 60 political-activity audits in 2012, after the Harper government publicly tagged some environmental charities as radicals and money-launderers and possibly linked to terrorists. The federal budget that year earmarked $8 million for the special audits, later increased to more than $13 million through to 2017.

Audit net widens

The first wave of such audits hit environmental charities, but the net has since been widened to capture human-rights organizations, anti-poverty groups, international-aid and religious groups. Other labour-supported charities have been targeted previously, including CoDev and the Canadian Centre for Policy Alternatives.

Many charities undergoing political-activity audits have been outspoken against Harper government policies, and the audits have tied them in knots, draining resources. At least one group has lost its coveted charitable status, while others report self-censoring their public statements for fear of aggravating the auditors.

The Canada Revenue Agency, however, says its choice of which charities to audit is made at arm's length from government, with no input from any cabinet minister, including Revenue Minister Kerry-Lynne Findlay. The agency declined comment on the Steelworkers audit.

The United Steelworkers' Canadian arm has frequently butted heads with the Conservative government over issues such as perceived lack of support for the manufacturing sector and what it sees as anti-labour policies.

The Steelworkers' charity draws largely on a one-cent-an-hour donation from union members, worth between $20 and $40 annually from workers, who can also opt out.

The fund gives about two per cent of its annual revenues to the non-charitable Canadian Network on Corporate Accountability, an umbrella group that includes faith groups, environmental NGOs and others, and is avowedly political, working to hold mining companies accountable in Canada for overseas misbehaviour.

Under the tax agency rules, charities can devote up to 10 per cent of their resources to political activities, and the Steelworkers' charity fund reports no political activities other than its small role in the CNCA, worth two per cent of all expenses.

The audit is looking specifically at the fund's formal agreements with the Canadian Network on Corporate Accountability, as well as any "non-partisan actions concerning the retention, opposition or change to any law, policy or decisions of any level of government in any country."

Clashes with government

The network clashed with the Harper government as recently as last month, when it said a newly appointed ombudsman for corporate social responsibility was toothless, and that Canada needs tougher laws to deal with rogue mining companies.

"They would see us as a thorn in their side," said Neumann. Prime Minister Stephen Harper has "got his scope clearly on us. … These [audits] aren't random."

Last month, the charity Dying With Dignity had its charitable status annulled after a Canada Revenue Agency audit. And the charity Environmental Defence says it is appealing an adverse ruling from the agency after an audit.

The agency says that, as of March 31, it has completed 21 political-activity audits, with 28 still underway. Another 11 audits are to be started before the project ends in 2017. Officials will not identify any of the target charities because of the confidentiality provisions of the Income Tax Act.

So far, five charities have received notices of the agency's intention to revoke their charitable registration, while six have received education letters, and eight have been asked to sign compliance agreements for more grievous problems. There has also been one voluntary revocation, and one annulment, Dying With Dignity.

Also on HuffPost:

Photo gallery America's Strangest Taxes (PHOTOS) See Gallery