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Federal Tax - Charities. Priority Foundation v. Canada (National Revenue) ["qualified donee"]
In Priority Foundation v. Canada (National Revenue) (Fed CA, 2025) the Federal Court of Appeal dismissed the appellant's appeal, here brought against "a notice of intention to revoke its registration as a charity":[1] Priority Foundation appeals to this Court, pursuant to paragraph 172(3)(a.1) of the Income Tax Act, R.S.C. 1985, c. 1, 5th Supp. (ITA), in respect of a notice of intention to revoke its registration as a charity. The notice was issued on November 10, 2022, by the Minister of National Revenue (or the Canada Revenue Agency (CRA) acting on the Minister’s behalf) pursuant to subsections 149.1(3) and 168(1) of the ITA. The revocation took effect on January 14, 2023, when a copy of the notice was published in the Canada Gazette.
[2] The Minister’s decision to revoke Priority’s status as a registered charity was based on the Minister’s opinion that Priority failed to comply with the requirements of the ITA by making gifts to non-qualified donees. At issue are gifts made by Priority to charities in the United States.
[3] Priority submits that, by operation of article XXI(7) of the Convention between Canada and the United States of America with Respect to Taxes on Income and on Capital, September 26, 1980, Can. T.S. 1984 No. 15 (Tax Convention), a gift to a U.S. charity is to be treated, for the purposes of Canadian taxation, as a gift to a registered charity under the ITA (Gift Provision). Since a registered charity is a "“qualified donee”" under the ITA, the Minister had no grounds to revoke its charitable status.
[4] This is not the first time the interpretation of article XXI(7) of the Tax Convention has been raised in this Court (see Prescient Foundation v. Canada (National Revenue), 2013 FCA 120 and Public Television Association of Quebec v. Canada (National Revenue), 2015 FCA 170). However, in both cases, this Court was able to resolve the appeals without interpreting the Gift Provision in the Tax Convention.
[5] The parties agree that the interpretation of article XXI(7) of the Tax Convention will resolve the outstanding issues between them.
....
[19] Priority now appeals to this Court under paragraph 172(3)(a.1) of the ITA from the Minister’s failure to confirm or vacate the notice of intention to revoke within 90 days of Priority having served its notice of objection. Priority submits that the Minister’s interpretation of article XXI(7) of the Tax Convention is wrong in law.
III. Issues
[20] The issue in this appeal is whether the Minister erred in revoking Priority’s charitable registration on the basis that Priority made gifts to non-qualified donees. The determination of this question involves the interpretation of article XXI(7) of the Tax Convention and its impact on the definition of "“qualified donee”" in subsection 149.1(1) of the ITA. Put differently, I must decide whether article XXI(7) of the Tax Convention permitted Priority to maintain its eligibility for charitable registration by making gifts to U.S. 501(c)(3) entities.
IV. Analysis
A. Standard of review
[21] Decisions that are subject to statutory appeals under paragraph 172(3)(a.1) of the ITA are to be reviewed on appellate standards. Questions of law, including questions of treaty interpretation, are reviewed on a standard of correctness. For questions of fact or mixed fact and law where the legal principle is not readily extricable, the standard of review is palpable and overriding error (Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 at para. 37; Canada v. Alta Energy Luxembourg S.A.R.L., 2021 SCC 49 at para. 50; Athletes 4 Athletes Foundation v. Canada (National Revenue), 2021 FCA 145 at para. 16).
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B. Legislative Framework
[23] Before turning to the interpretation of article XXI(7) of the Tax Convention, I find it useful to provide a brief and high-level overview of the way in which the ITA applies to charitable gifts. Although some of the provisions of the ITA have been amended over the years at issue, except as otherwise noted, the changes are not relevant for the purposes of Priority’s appeal.
[24] Generally, when a corporation makes a charitable gift to a qualified donee, the corporation is entitled to claim a deduction of the amount of the gift in computing its taxable income (paragraph 110.1(1)(a) of the ITA). An individual donor, on the other hand, is entitled to claim a tax credit in the computation of their tax payable for a taxation year (subsections 118.1(1) and (3) of the ITA). Eligible charitable gifts that may be claimed in a taxation year are generally limited to a percentage of the donor’s net income for that taxation year. Unused eligible charitable gifts may be carried forward for up to 5 years.
[25] Throughout most of the audit period, subsection 149.1(1) of the ITA defined a "“qualified donee”" as follows:qualified donee, at any time, means a person that is
donataire reconnu Sont des donataires reconnus à un moment donné :
(a) registered by the Minister and that is
a) toute personne enregistrée à ce titre par le ministre qui est :
(i) a housing corporation resident in Canada and exempt from tax under this Part because of paragraph 149(1)(i) that has applied for registration,
(i) une société d’habitation résidant au Canada et exonérée de l’impôt prévu à la présente partie par l’effet de l’alinéa 149(1)i) qui a présenté une demande d’enregistrement,
(ii) a municipality in Canada,
(ii) une municipalité du Canada,
(iii) a municipal or public body performing a function of government in Canada that has applied for registration,
(iii) un organisme municipal ou public remplissant une fonction gouvernementale au Canada qui a présenté une demande d’enregistrement,
(iv) a university outside Canada that is prescribed to be a university the student body of which ordinarily includes students from Canada, or
(iv) une université située à l’étranger, visée par règlement, qui compte d’ordinaire parmi ses étudiants des étudiants venant du Canada,
(v) a foreign charity that has applied to the Minister for registration under subsection (26),
(v) un organisme de bienfaisance étranger qui a présenté au ministre une demande d’enregistrement en vertu du paragraphe (26);
(b) a registered charity,
b) tout organisme de bienfaisance enregistré;
(c) a registered Canadian amateur athletic association, or
c) toute association canadienne enregistrée de sport amateur;
(d) Her Majesty in right of Canada or a province, the United Nations or an agency of the United Nations;
d) Sa Majesté du chef du Canada ou d’une province, l’Organisation des Nations Unies ou une institution reliée à cette dernière. [26] For the purposes of my analysis below, the relevant qualified donees include a registered charity, a university outside of Canada whose student body ordinarily includes students from Canada and that has been registered by the Minister, and a foreign charity that has successfully applied for registration to the Minister under subsection 149.1(26) of the ITA.
[27] A "“registered charity”" is defined in subsection 248(1) of the ITA. It includes a charitable organization, private foundation or public foundation, that is resident in Canada and was either created or established in Canada and that has applied to the Minister for registration and that is at that time registered as a charitable organization, private foundation or public foundation. Pursuant to paragraph 149(1)(f) of the ITA, a registered charity is exempt from paying tax on its income. The registered charity may also issue receipts to donors for the gifts it receives. Where a registered charity fails to comply with the requirements of the ITA, the Minister may revoke the registered charity’s charitable registration, one effect of which will be the loss of its tax-exempt status (ITA, subsections 149.1 (2), (3), (4) and (4.1), paragraph 168(1)(b), and subsection 168(2)).
[28] Pursuant to subsection 149.1(1) of the ITA, a public foundation, like Priority, must be a charitable foundation, which is defined as a corporation or trust that is constituted and operated exclusively for "“charitable purposes”" and that is not a charitable organization. As this Court noted in Prescient, "“[a]s a general rule, charitable organizations engage in charitable activities, while charitable foundations raise money for charitable purposes”" (Prescient at para. 15).
[29] During the audit period, subsection 149.1(1) of the ITA defined "“charitable purposes”" as including "“the disbursement of funds to a qualified donee…”" [emphasis added].
[30] Given the residency and creation or establishment requirements in the subsection 248(1) definition of a "“registered charity”", a foreign charity such a U.S. 501(c)(3) entity does not meet the definition of a qualified donee under the ITA. As a result, having regard only to the provisions of the ITA, a gift made by a Canadian taxpayer to a foreign charity is ineligible for tax relief unless the Minister registers the foreign charity as a qualified donee.
[31] That said, there are situations that permit cross-border tax relief. One such situation is where a country has a bilateral agreement with another country to provide tax relief. The Tax Convention is one such agreement. Article XXI provides for limited reciprocal tax relief in certain circumstances where a resident of one country makes a gift to a tax-exempt organization that is a resident of the other country.
C. The Tax Convention
[32] The Tax Convention was signed in September 1980 and enacted into Canadian law by the Canada-United States Tax Convention Act, 1984, S.C. 1984, c. 20. It replaced the then existing tax convention between Canada and the United States dating back to 1942. Since its signature in 1980, the Tax Convention has been amended by the adoption of five protocols, the latest of which was signed in September 2007.
[33] Article XXI of the Tax Convention addresses the reciprocal recognition of tax-exempt status for certain types of organizations, as well as the treatment of cross-border gifts and contributions. At issue in this appeal is the interpretation of article XXI(7), which reads as follows:7. For the purposes of Canadian taxation, gifts by a resident of Canada to an organization that is a resident of the United States, that is generally exempt from United States tax and that could qualify in Canada as a registered charity if it were a resident of Canada and created or established in Canada, shall be treated as gifts to a registered charity; however, no relief from taxation shall be available in any taxation year with respect to such gifts (other than such gifts to a college or university at which the resident or a member of the resident's family is or was enrolled) to the extent that such relief would exceed the amount of relief that would be available under the Income Tax Act if the only income of the resident for that year were the resident's income arising in the United States. The preceding sentence shall not be interpreted to allow in any taxation year relief from taxation for gifts to registered charities in excess of the amount of relief allowed under the percentage limitations of the laws of Canada in respect of relief for gifts to registered charities.
[emphasis added]
7. Aux fins de l'imposition canadienne, les dons versés par un résident du Canada à une organisation qui est un résident des États-Unis, qui est généralement exempt de l'impôt des États-Unis et qui, au Canada, pourrait avoir le statut d'organisme de charité enregistré si elle était un résident du Canada et si elle avait été créée ou établie au Canada, sont considérés comme dons versés à un organisme de charité enregistré; toutefois, aucun allégement fiscal n'est accordé au cours d'une année d'imposition quelconque pour des dons (autres que ceux versés à un collège ou à une université auxquels le résident ou un membre de sa famille est ou était inscrit) dans la mesure où un tel allégement serait supérieur au montant de l'allégement accordé en vertu de la Loi de l'impôt sur le revenu si le seul revenu du résident pour cette année d'imposition était le revenu du résident provenant des États-Unis. La phrase précédente n'est pas interprétée comme permettant, au cours d'une année d'imposition quelconque, un allégement fiscal pour des dons à des organismes de charité enregistrés d'un montant qui excède celui accordé, en matière de plafond des pourcentages, en vertu de la législation du Canada à l'égard de l'allégement pour des dons à des organismes de charité enregistrés.
[je souligne] At paras 39-87 the court walks through the text, context and purpose elements of interpretatiing the tax treaty. . Jewish National Fund of Canada Inc. v. Canada (National Revenue)
In Jewish National Fund of Canada Inc. v. Canada (National Revenue) (Fed CA, 2025) the Federal Court of Appeal dismissed an appeal, that from a JR challenging a Ministerial revocation of charitable registration "by publishing a notice of intention to revoke (NITR) in the Canada Gazette":[2] The Federal Court, relying on the authority of Stewards’ Charitable Foundation v. Minister of National Revenue (Federal Court File No. T-2706-22) [Stewards’], concluded "“that the Federal Court is without jurisdiction to entertain judicial review of the publication of a NITR”": Jewish National Fund of Canada Inc. v. Canada (National Revenue), 2024 FC 1796 (per Whyte Nowak, J.) at para. 42. With no jurisdiction to judicially review the publication decision, the Federal Court was without jurisdiction to grant the appellant the relief it sought and therefore dismissed the motion.
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[25] The appellant says the Federal Court erred in concluding that it had no jurisdiction to entertain the judicial review application. The appeal provisions in the Income Tax Act only capture the decision to issue or confirm the issuance of the NITR. The appellant asserts that the decision to publish the NITR, which results in revocation of charitable registration, is a separate decision that the appellant cannot appeal. Therefore, only the Federal Court has jurisdiction to judicially review the publication decision, citing subsection 18(1) of the Federal Courts Act, R.S.C. 1985, c. F-7.
[26] I do not agree that the Federal Court has jurisdiction.
[27] Subsection 172(3) of the Income Tax Act provides that a registered charity may appeal to this Court the Minister’s decision to issue the NITR or to confirm it following objection. Section 180 provides as follows:"180 (1) An appeal to the Federal Court of Appeal pursuant to subsection 172(3) may be instituted by filing a notice of appeal in the Court within 30 days from"
"180 (1)"" Un appel à la Cour d’appel fédérale prévu au paragraphe 172(3) est introduit en déposant un avis d’appel à la cour dans les 30 jours suivant, selon le cas :"
"(a) the day on which the Minister notifies a person under subsection 165(3) of the Minister’s action in respect of a notice of objection filed under subsection 168(4),"
"a)"" la date à laquelle le ministre avise une personne, en application du paragraphe 165(3), de sa décision concernant l’avis d’opposition signifié aux termes du paragraphe 168(4);"
"[…]"
"…"
"(2) Neither the Tax Court of Canada nor the Federal Court has jurisdiction to entertain ""any proceeding in respect of a decision of the Minister from which an appeal may be instituted under this section."
"[Emphasis added.]"
"(2)"" La Cour canadienne de l’impôt et la Cour fédérale n’ont, ni l’une no l’autre, compétence pour connaître ""de toute affaire relative à une décision du ministre contre laquelle il peut être interjeté appel en vertu du présent article""."
"[Sans italique dans l’original.]" [28] The Supreme Court of Canada has said that "“[t]he phrase ‘in respect of’ is probably the widest of any expression intended to convey some connection between two related subject matters”": Nowegijick v. The Queen, 1983 CanLII 18 (SCC), [1983] 1 S.C.R. 29, 144 D.L.R. (3d) 193 at 39 [Nowegijick]. The synonymous French expression, "“relative à”", is equally broad.
[29] The NITR must be issued to the charity at least 30 days before it may be published. Revocation of charitable status is only effective on publication. Issuance of the NITR is thus a pre-condition to revocation. The decision to issue or confirm a NITR may be appealed, and any appeal must be to this Court. Once the NITR is issued, only this Court can order the Minister to stay publication and thereby stay revocation. Publication gives effect to the revocation that is the subject of the confirmed NITR. The confirmed NITR, in turn, may be challenged in an appeal.
[30] Given this legislative scheme, there can be no doubt that an application for judicial review of the Minister’s decision to publish the NITR is a proceeding "“in respect of”" (i.e., "“in relation to”", "“with reference to”", or "“in connection with”") the Minister’s decision to issue or confirm the NITR: Nowegijick at 39.
[31] Thus, subsection 180(2) is dispositive of the jurisdictional question in this appeal. If any court has jurisdiction to entertain an application for judicial review of the Minister’s publication decision, it is this Court, not the Federal Court: A.B.L.E. Association for Betterment of Literacy & Education v. The Queen, [1998] F.C.J. No. 1962, 1998 CanLII 17653 (F.C.A.) at para. 21.
[32] As I noted, the Associate Judge in Stewards’ went further, concluding that the publication decision is not a separate decision from the decision to issue the NITR and therefore cannot be judicially reviewed. The Federal Court agreed.
[33] The respondent asserts that proposition as an alternative ground for dismissing the appeal. It is unnecessary to address that issue and, given the appellant’s judicial review application in this Court, it also is inappropriate to do so. Nothing in these reasons should be interpreted as expressing any view on whether the publication decision is a separate decision amenable to judicial review.
[34] For these reasons, I would dismiss the appeal with costs. . Jewish National Fund of Canada Inc. v. Canada (National Revenue)
In Jewish National Fund of Canada Inc. v. Canada (National Revenue) (Fed CA, 2025) the Federal Court of Appeal dismissed an appeal, that from a JR challenging a Ministerial revocation of charitable registration "by publishing a notice of intention to revoke (NITR) in the Canada Gazette".
Here the court reviews the federal charitable registration revocation regime:[5] Before I explain why and describe the background to this appeal, it is useful to first outline the statutory framework governing revocation of charitable registration. While for simplicity I will refer to the Minister, the Minister’s delegates employed by the Canada Revenue Agency acted for the Minister.
I. Revocation of Charitable Registration
[6] The Minister may revoke the registration of a charity on one or more grounds in the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.): ss. 168(1), 149.1(4.1). To do so, the Minister must issue a NITR to the charity and then publish it in the Canada Gazette: Income Tax Act, s. 168(1). Revocation is effective only when the NITR is published: Income Tax Act, s. 168(2).
[7] However, the Minister may not publish the NITR before the expiry of 30 days after the NITR is mailed to the charity or such longer period as this Court may order on application: Income Tax Act, s. 168(2)(b). The charity may bring such an application any time before the NITR is published or the charity’s appeal of the NITR is determined: Operation Save Canada Teenagers v. Canada (National Revenue), 2011 FCA 71 at para. 11; Income Tax Act, s. 168(2). The charity’s right to seek an extension to the publication deferral period from this Court is independent of its right to object or appeal: International Charity Association Network v. Canada (National Revenue), 2008 FCA 62 at para. 6.
[8] A charity cannot appeal the revocation itself: Opportunities for the Disabled Foundation v. Canada (National Revenue), 2016 FCA 94 at para. 22. However, a charity may appeal the Minister’s issuance of the NITR to this Court: Income Tax Act, ss. 172(3)(a.1), 180(1).
[9] Before appealing, the charity must serve a notice of objection to the NITR on the Minister: Income Tax Act, ss. 168(4), 172(3)(a.1). If the Minister neither vacates nor confirms the NITR within 90 days of the notice of objection’s service, the charity may proceed with its appeal in this Court or wait until the Minister confirms the NITR following the objection and appeal the confirmation: Income Tax Act, s. 172(3)(a.1). The appeal must be commenced no later than 30 days after confirmation, unless this Court extends that period on application: Income Tax Act, s. 180(1).
[10] Notwithstanding a charity’s objection or appeal, the Minister is not required to, but may, defer publication of the NITR in the Canada Gazette. . Walby v. Canada [gifts]
In Walby v. Canada (Fed CA, 2025) the Federal Court of Appeal dismissed Tax Court appeals, here from MNR reassessments denying a claim for "charitable donation tax credits". The case considers several cases and ITA statutory provisions on this issue [eg. regarding 'gifts' and 'value'], though not lending themselves to convenient extraction [para 20-75].
. Muslim Association of Canada v. Canada (Attorney General)
In Muslim Association of Canada v. Canada (Attorney General) (Ont CA, 2024) the Ontario Court of Appeal dismisses a Charter JR against a pending CRA charity audit, here on grounds of prematurity and adequate alternative remedy:[2] The appellant argues that the application judge erred by improperly applying the prematurity principle to an application for Charter relief, and in finding that the administrative appeal process under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (the “ITA”) provided the appellant with an effective alternate means to obtain the relief it seeks.
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Background
[4] The applicant describes itself as Canada’s largest grassroots Muslim charity, committed to promoting a moderate, balanced view of Islam. It has over 500 members, 1500 volunteers, operates 22 mosques and community centres, runs 30 schools, and serves more than 150,000 members of the Canadian Muslim community through local chapters in 14 cities across Canada.
[5] The CRA is the regulator of registered charities in Canada. Its mandate includes ensuring that registered charities meet statutory requirements for registration and are not abused by terrorist organizations.
[6] In 2015, the CRA commenced the Audit. It was extensive, involving dozens of interviews and visits to the appellant’s properties, as well as a review of approximately 1,000,000 financial transactions, over 415,000 emails, and over 63,000 other files.
[7] In March 2021, the CRA issued a 150-page Administrative Fairness Letter (the “AFL”) setting out CRA's preliminary findings and recommendations. The AFL identified numerous areas where the CRA alleged that the appellant had failed to comply with relevant provisions of the ITA and/or its regulations, and recommended that the appellant’s charitable status be revoked. The AFL invited the appellant to respond to these preliminary findings and recommendations, and appellant did so in writing in August 2021, December 2021 and January 2022.
[8] In April 2022, the appellant commenced an application in Superior Court (the “Application”) seeking an order terminating the Audit on grounds that the Audit, including the AFL, had violated its Charter-protected rights to freedom of religion, freedom of expression, freedom of association, and freedom from discrimination. The Application identified three aspects of the Audit process that had infringed its Charter rights (collectively, the “Audit Process Concerns”): (i) the risk-based assessment used by the CRA to determine which charities to audit, which the Appellant argues disproportionately single out Muslim charities; (ii) the appellant’s referral for auditing, which it argues was based on dubious and unreliable sources; and (iii) the manner in which the Audit had been carried out, resulting in the AFL, which the appellant argues reflects Islamophobic attitudes and a profound misunderstanding of Islam. . Sigma Chi Canadian Foundation v. Canada (National Revenue)
In Sigma Chi Canadian Foundation v. Canada (National Revenue) (Fed CA, 2024) the Federal Court of Appeal considered an ITA s.172(3)(a.1) appeal of a decision of the Minister of National Revenue in which she "confirmed her intention to revoke Sigma Chi’s registration as a charity". The case is also enlightening for the nature of sororities and fraternities:[2] Sigma Chi was registered as a charity with effect from 1992. It describes itself as an international fraternal organization with 244 active undergraduate chapters and 152 alumni chapters across Canada and the United States. When it was registered, one of its stated objectives was to “assist deserving undergraduate, graduate, and other students attending or enrolled at institutions and systems of higher education in Canada who are in financial need to continue and complete their education at such institutions and systems.”
[3] An organization must meet a number of statutory requirements to qualify and continue to qualify for charitable registration. In 2010 and 2011, the Canada Revenue Agency audited Sigma Chi’s operations. The audit identified a number of areas of non-compliance. These included Sigma Chi’s failure to devote all of its resources to charitable activities and the provision of personal benefits to members. The audit found that eligibility for the majority of Sigma Chi’s scholarships was restricted to its members.
[4] In March 2011, the Minister and Sigma Chi entered into a compliance agreement to address issues identified in the audit. In the agreement, Sigma Chi agreed, among other things, to “devote all of its resources to charitable activities,” and to not restrict its scholarships and financial assistance to Sigma Chi members.
[5] The CRA commenced a second audit in November 2017. The Minister informed Sigma Chi of findings from the audit that Sigma Chi was not complying with statutory requirements, including by failing to devote its resources to its own charitable activities, failing to maintain adequate books and records, and issuing non-compliant tax receipts. The audit also found that in the 2015 and 2016 fiscal periods respectively, 61% and 74% of total resources spent on scholarships and awards were for “inhouse scholarships,” which are restricted to members and pledges, and that some scholarships were awarded based on the recipient’s role in Sigma Chi or how they represented its ideals. The audit determined that Sigma Chi’s activities were primarily for the benefit of its members, not for the benefit of the public (as the ITA requires of a registered charity).
[6] Sigma Chi provided written representations to the Minister in response to the audit. After considering these representations, the Minister determined that Sigma Chi did not meet the requirements for registration as a charity, and issued a notice of intention to revoke. Sigma Chi filed an objection in response. The Minister reviewed Sigma Chi’s submissions in support of its objection, but found that they failed to demonstrate that Sigma Chi met the requirements for maintaining its registration. However, she decided in light of the objection that she would not continue to rely on one of the grounds she had initially advanced—the failure to meet the requirements for books and records in subsection 230(2) of the ITA.
[7] The Minister now relies on three grounds for revocation: (1) that Sigma Chi has provided private benefits for members, and thus has not been operated exclusively for charitable purposes as required by paragraph 149.1(1)(a) of the ITA; (2) that it has provided funds to non-qualified donees, contrary to paragraph 149.1(1)(a.1); and (3) that it did not have direction and control over funds sent to an American organization, and thus failed to devote all of its resources to charitable activities it itself carried on, contrary to paragraph 149.1(1)(a.1): Canadian Committee for the Tel Aviv Foundation v. Canada, 2002 FCA 72 at para. 40.
[8] Sigma Chi contests all three of these findings. It is common ground that the standard of review in respect of these findings is the highly deferential standard of palpable and overriding error, and that to displace the Minister’s decision based on them, Sigma Chi must demonstrate palpable and overriding error in respect of all three: Colel Chabad Lubavitch Foundation of Israel v. Canada (National Revenue), 2022 FCA 108 at paras. 49, 51. Sigma Chi also submits that the Minister breached her duty of procedural fairness, and that her conduct raises a reasonable apprehension of bias. We do not agree that any of these grounds are made out.
[9] First, we see no palpable and overriding error in the finding that Sigma Chi has provided private benefits to its members through its inhouse scholarships. While Sigma Chi submits that these scholarships are open to all male university students eligible to apply for Sigma Chi membership, they are ultimately payable only to recipients who are accepted as members or pledges. Moreover, despite Sigma Chi’s commitment in the compliance agreement to “devote all of its resources to charitable activities” and to not restrict the beneficiaries of the scholarships and educational assistance program, the record shows that it continued to grant inhouse scholarships in 2015, 2016, 2020, and 2021. In 2015 and 2016 respectively, 75% and 82% of Sigma Chi’s scholarship funds were restricted to Sigma Chi members and pledges. In 2020 and 2021, Sigma Chi awarded $216,760 in inhouse scholarships. The Minister also points out that, at the time of its registration, Sigma Chi’s stated purpose of assisting students pursuing higher education made no mention of any restriction to members or pledges. But as recently as May 2023, Sigma Chi stated on its website that “[t]he Foundation exists as a vehicle for local Active Chapters, Alumni Chapters and/or House Corporations to raise tax-deductible funds for educational purposes—primarily for the benefit of Active Chapters and Active brothers” (emphasis added). This is not a charitable purpose under the ITA.
[10] Second, we also see no reviewable error in the Minister’s finding that Sigma Chi has provided funds to non-qualified donees by making loans to Sigma Chi fraternity housing corporations, established to provide housing to members. In addition, it breached the compliance agreement by failing to obtain security for its loans to London Sigma Chi Properties and by making a further advance to London Sigma Chi Properties, despite its obligations under the compliance agreement. The loans and advance to London Sigma Chi Properties involved significant sums. According to the first audit, the loans totaled $403,015. The further advance was of $25,000.
[11] Third, we see no reviewable error in the Minister’s conclusion that Sigma Chi failed to maintain direction and control over the Horizon Scholarship program, a program partially funded by Sigma Chi and administered in the United States. As the Minister points out, Sigma Chi has only one of the eight seats on the governing board, and only two of 16 on the selection committee. There was ample support in the record for the Minister’s conclusion that Sigma Chi did not have direction and control over the use of its funds.
[12] Finally, in our view, Sigma Chi has failed to make out a reasonable apprehension of bias, and there was no deprivation of procedural fairness.
[13] The test for establishing a reasonable apprehension of bias is whether a reasonable and informed person, viewing the matter realistically and practically, and having thought the matter through, would think it is more likely than not that the decision maker, whether consciously or unconsciously, would not decide fairly: Yukon Francophone School Board, Education Area #23 v. Yukon (Attorney General), 2015 SCC 25 at para. 20. There is a “high burden” on the party seeking to establish a reasonable apprehension of bias: Yukon Francophone at para. 26. Sigma Chi’s grounds for claiming a reasonable apprehension of bias fail to meet this high burden.
[14] Sigma Chi submits that the Minister’s conduct raises a reasonable apprehension of bias because she treated Sigma Chi in a manner dissimilar to other organizations that restrict their scholarships to a subset of the public. Sigma Chi mentions scholarships offered by the University of Toronto that are restricted to students enrolled at Trinity College. However, as this Court has held in the tax context, the fact that others benefitted from an exemption is “not relevant” to whether a particular taxpayer should benefit from that same exemption: R. v. Sinclair, 2003 FCA 348 at para. 7. Even if comparisons were relevant, the record before us falls well short of providing an evidentiary basis on which the Court could draw meaningful comparisons.
[15] Sigma Chi also submits that the Minister’s refusal to consider Sigma Chi’s offers to take corrective measures grounds a reasonable apprehension of bias. However, as the Minister notes, Sigma Chi was given three formal opportunities to respond to the issues identified by the Minister. The record before us shows that Sigma Chi’s submissions were taken seriously, and were thoroughly reviewed and considered. We agree with the Minister that Sigma Chi was not entitled to continuously negotiate further corrective measures, especially given its failure to meet its obligations under the compliance agreement. . Sheldon M. Chumir Foundation for Ethics in Leadership v. Canada (National Revenue)
In Sheldon M. Chumir Foundation for Ethics in Leadership v. Canada (National Revenue) (Fed CA, 2023) the Federal Court of Appeal briefly set out some procedures for revoking a federal charity's registration:[1] The Sheldon M. Chumir Foundation for Ethics in Leadership is a registered charity under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (ITA). The Minister of National Revenue has notified the Foundation under subsection 168(1) of the ITA of her intention to revoke the Foundation’s registration as a registered charity. The revocation is to take effect when a copy of the notice is published in the Canada Gazette. . Fortius Foundation v. Canada (National Revenue)
In Fortius Foundation v. Canada (National Revenue) (Fed CA, 2022) the Federal Court of Appeal considers the complex statutory and Federal Rule-governed procedure for a charity seeking to challenge a Ministerial ITA s.168(2)(b) 'notice of intention' to publish a revocation of it's charitable status. Most of the case involves the application of the common law RJR-Macdonald stay test, which seems to be the proper route as I can't locate a statutory stay provision that applies pending the outcome of the available ITA s.168(4) 'notice of objection' route.
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