Supreme Court of Canada accepts Imagine Canada's arguments on behalf of charities in historic appeal



    OTTAWA, Oct. 5 /CNW/ - The Supreme Court of Canada released its decision
today in Amateur Youth Soccer Association v. Canada Revenue Agency, an appeal
from a decision by the Canada Revenue Agency (CRA) refusing registration of a
sports group as a charity. The appeal, which was argued on May 16, 2007 before
the full Court, was only the third time in the past 50 years that the Supreme
Court of Canada has undertaken a review of the question of what constitutes a
charity under Canadian law.
    Imagine Canada intervened in the appeal with a view to ensuring that the
Court, in considering this particular appeal, confirmed that the legislative
regime governing charities was subject to interpretation and evolution under
the common law. In particular, Imagine Canada sought to clarify that
legislative provisions under the Income Tax Act granting charity-like benefits
to certain national sports and arts organizations and groups providing housing
for seniors did not restrict the ongoing development of the definition of
charities under the common law. The Court made it clear that organizations
that use sport as a means of achieving their charitable purposes are entitled
to put forward applications for registration as charities and have them duly
considered by CRA.
    In the particular case before the Court, the Amateur Youth Soccer
Association (AYSA) had filed for registration as a charity with the CRA in
2005. Its application was rejected on the basis that sports organizations, as
such, are not charitable under Canadian law. AYSA appealed the CRA decision to
the Federal Court of Appeal. In its decision, the Court of Appeal said that
organizations such as the AYSA could not qualify as charities. It based its
decision on the fact that Parliament, in the early 1970s, had identified a
select category of organizations -- Registered Canadian Amateur Athletic
Associations or "RCAAAs" -- and provided preferential tax treatment for them
under the Income Tax Act. The Act makes it clear that RCAAAs are not charities
but are entitled to similar tax benefits to charities, including the ability
to provide donors with receipts that can be used to claim tax credits.
    The Federal Court of Appeal concluded in its 2006 judgment that, because
Parliament had chosen to create RCAAAs, it could be presumed that Parliament
intended that sports organizations that qualified as RCAAAs could enjoy
favourable tax treatment and those that did not qualify as RCAAAs could not
then qualify as charities.
    Imagine Canada argued in its intervention before the Supreme Court of
Canada that giving special tax treatment to a particular group of
organizations such as RC-Triple-As does not change the rules related to
charities. In particular, by conferring charitable-like benefits on one set of
organizations it should not be presumed that Parliament intended to limit
access to charitable status by other organizations, unless explicitly stated,
which is not the case in respect of RC-Triple-As. Imagine Canada also argued
that the test to determine whether an organization is charitable was
established by the Supreme Court of Canada in the Vancouver Society case and
that the Court should apply that test to the AYSA.
    In its 23-page judgement, the Court found that the purposes and
activities of that particular organization were not charitable under the
Income Tax Act or under common law. However, the Court made clear that
organizations that use sport as a means of achieving their charitable purposes
are entitled to continue to put forward applications for registration as
charities and have them duly considered for possible registration. This
finding confirms that organizations that use sport or the arts as a means of
achieving their charitable purpose are not effectively precluded from seeking
charitable status by the existence of the RCAAA regime nor, by extension, the
National Arts Service Organizations (NASO) regime.
    Imagine Canada's intervention was made possible by a grant from The
Muttart Foundation of Edmonton acting on behalf of a consortium of private
foundations. Bob Wyatt, Executive Director of the Foundation, stated that this
was a good example of Imagine Canada's role in looking out for Canada's
charities. "The Court adopted, in whole, the arguments put forward by Imagine
Canada in the intervention. The evolving nature of charities under the common
law was preserved by the Court and these specialized legislative regimes will
not restrict the role of the common law in ensuring the continued evolution of
charities law in Canada."
    A small team of top charity lawyers donated their time and efforts to
successfully intervene on behalf of Imagine Canada, including Laird Hunter, QC
of Richards, Hunter in Edmonton; Susan Manwaring and Kate Lazier of Miller
Thomson LLP, Toronto; David Stevens of Gowling, Lafleur, Henderson LLP,
Toronto; and Jeffrey Beedell of Lang Michener LLP, Ottawa. The team was
assisted by Peter Broder, former Director of Regulatory Affairs, Imagine
Canada.
    A copy of the decision of the Supreme Court of Canada is now posted on
the Imagine Canada website at
www.imaginecanada.ca/files/en/misc/intervention_by_canadian_oct_2007.pdf.





For further information:

For further information: Bob Wyatt, Executive Director, The Muttart
Foundation, (780) 913-8881, bwyatt@muttart.org; Georgina Steinsky-Schwartz,
CEO, Imagine Canada, 2 Carlton Street, Suite 600, Toronto, ON, M5B 1J3,
1-800-263-1178 x 225, (416) 597-2293 x 225, georgina@imaginecanada.ca

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