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Federal Tax - Charities (2). Central Organization for Jewish Education Lubavitch British Columbia v. Canada (National Revenue)
In Central Organization for Jewish Education Lubavitch British Columbia v. Canada (National Revenue) (Fed CA, 2026) the Federal Court of Appeal dismissed (walking through the RJR test) an interlocutory injunction motion [under FCR 372-373] to bar a statutory ITA s.168(1) ['Revocation of Registration of Certain Organizations and Associations - Notice of intention to revoke registration'] charity revocation notice:[2] If a charity ceases to comply with any of the requirements governing registration, the Minister of National Revenue (Minister) may give notice, under subsection 168(1) of the ITA, that she proposes to revoke its registration. Thirty days following the mailing date of that notice, the Minister may publish a copy of the notice of revocation in the Canada Gazette under paragraph 168(2)(b) of the ITA. Revocation is effective the date the notice is published. Rights of objection and appeal remain.
[3] The Canada Revenue Agency (CRA) determined that Central failed to comply with the requirements necessary to maintain registration as a charity. The Minister consequently advised, through the Director General of the Charities Directorate, of her intention to publish a notice of revocation in the Canada Gazette revoking Central’s registration pursuant to paragraph 168(2)(b) of the ITA.
[4] Central filed an application for an injunction under rules 372 and 373 of the Federal Courts Rules, SOR/98-106 seeking to enjoin the Minister from publishing the notice of revocation until it had the opportunity to pursue the objection and appeal process under subsections 168(4) and 172(3) of the ITA. ....
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II. The legal framework
[17] The issue is whether Central has shown that it would be just and equitable for the Court to stay publication of the notice revoking registration until determination of the appeal process, based on the well-established tripartite test governing interim relief (Google Inc. v. Equustek Solutions Inc., 2017 SCC 34, [2017] 1 S.C.R. 824 at para. 25 (Google); RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311 (RJR-MacDonald)); Universal Ostrich Farms Inc. v. Canada (Food Inspection Agency), 2025 FCA 164 at para. 14 (Ostrich Farms); Slepcsik v. Canada (Citizenship and Immigration),2026 FCA 137 at para. 29 (Slepcsik)).
[18] The Google/RJR-MacDonald test applies to both applications to restrain the publication of revocation notices as well as to motions for interim and interlocutory stays (Fortius Foundation v. Canada (National Revenue), 2022 FCA 176 at para. 15 (Fortius); Ahlul-Bayt Centre, Ottawa v. Canada (National Revenue), 2018 FCA 61, 2018 D.T.C. 5037 at para. 8 (Ahlul-Bayt)). Consequently, Central must satisfy the same three requirements: that there is a serious issue to be tried, that publication of the notice will cause irreparable harm, and that the balance of convenience favours the applicant. Assessing these criteria is context‑specific and requires the Court to determine whether granting the relief is "“just and equitable in all of the circumstances of the case”". The test is discretionary, but this does not alter the requirements of the test, nor does it add a further element (Fortius at para. 15 citing Google at para. 25; Slepcsik at paras. 29, 30; Ahlul-Bayt at para. 12).
[19] All three prongs of the test must be satisfied, and a court cannot grant relief where one element has not been met. As explained by Rochester J. in Slepcsik, this does not mean that the three prongs are independent. There are "“important and considerable interconnections”" between the three factors. Strength in one element may serve to balance weakness in another. However, the failure to satisfy one element cannot be rescued by strength in the other two (Slepcsik at paras. 32, 111, citing Ostrich Farms at para. 14). Each element must be satisfied, although to varying degrees.
[20] The threshold for establishing a serious issue is low. To satisfy this test, the moving party must demonstrate only that the objection is neither vexatious nor frivolous based on a preliminary assessment of the merits of the case. A prolonged examination of the merits is generally neither necessary nor desirable (RJR-MacDonald at p. 337; Slepcsik at para. 33). However, where the result of the interlocutory motion, in effect, amounts to a final determination of the underlying proceeding, a more extensive review of the merits of the case must be undertaken and a likelihood of success must be shown (RJR-MacDonald at pp. 338–339; Fortius at para. 16; Slepcsik at para. 34).
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III. Irreparable Harm
[22] To prove that it would suffer irreparable harm, an applicant must establish that it will suffer harm of a type or nature that "“cannot be quantified in monetary terms or cannot otherwise be cured”" (RJR-MacDonald at p. 341; Fortius at para. 18; Slepcsik at para. 39; Ahlul-Bayt at para. 10). A court may consider the interests of those who are dependent on the charity in this assessment (Fortius at para. 18; Glooscap Heritage Society v. Canada (National Revenue), 2012 FCA 255, 440 N.R. 232 at para. 34 (Glooscap)). Only clear and compelling evidence can satisfy this branch of the test, as irreparable harm cannot be inferred. It requires evidence at a convincing level of particularity that demonstrates a real probability that unavoidable irreparable harm will result unless the stay is granted (Fortius at para. 18; Haché v. Canada, 2006 FCA 424, [2006] F.C.J. No. 1886 (QL) at para. 11; Glooscap at para. 31). That said, the evidentiary burden on an applicant seeking a stay, such as the case here, is no different – it remains the balance of probabilities (Fortius at para. 18).
[23] The determination whether irreparable harm has been established takes place within the parameters or guardrails of certain principles. I have mentioned two; the rejection of evidence that is based on speculation, and the need for particularity sufficient to meet the evidentiary burden. But there is a third constraint, and that is that the normal, foreseeable consequences associated with the exercise of the statutory powers granted by the Minister do not, in and of themselves, give rise to irreparable harm (Fortius at para. 32).
[24] This Court has rejected the assertion that irreparable harm necessarily flows from the Minister’s exercise of the statutory power authorized by Parliament. If that, alone, were sufficient, irreparable harm would be established in every case, as a charity could say that its work would be seriously impaired by the Minister’s revocation and the inevitable reduction in donations (Gateway City Church v. Canada (National Revenue), 2013 FCA 126, 445 N.R. 360 at para. 14 (Gateway)):Accepting [such general assertions] as sufficient evidence of irreparable harm would unduly undercut the power Parliament has given to the Minister to protect the public interest in appropriate circumstances by publishing her notice and revoking a registration even before the determination of the objection and later appeal. [25] This is not saying that interlocutory relief can never or seldom obtained; rather, it explains why the assertion of irreparable harm must be accompanied with convincing evidence, usually of a financial nature.
[26] Publication of the notice of revocation does not foreclose the applicant’s statutory appeal rights (Fortius at para. 26). The ITA permits the Minister to revoke charitable registration "“at this time, subject, of course, to later challenge”" (Glooscap at para. 52). An applicant has the right to file an objection with the Minister in response to a decision to revoke the charity’s registration, and if the Minister confirms his decision, the applicant can then appeal to this Court, pursuant to subsection 172(3) of the ITA. At that stage, the Court will hear the appeal on its merits. The outcome on this motion does not therefore eliminate the opportunity the applicant has under the ITA to challenge the Minister’s decision to revoke its registration as a charity.
[27] The mere assertion that an application may become moot in the absence of a stay is insufficient to establish irreparable harm (Fortius at paras. 20, 27). To accept the assertion that a dismissal of a motion for injunctive relief renders the application moot would, again, result in a predetermined outcome in all analogous cases; in every case, a registered charity facing revocation of its charity status could effectively frustrate the Minister’s ability to employ the statutory powers under subsection 168(2) of the ITA by filing both an application seeking a long‑term stay of the revocation and a motion seeking stay (Fortius at para. 27).
[28] Therefore, absent evidence of unique or specific harm or damage, irreparable harm does not encompass the ordinary consequences that flow from a charity losing its registered charity status (such as loss of tax-exempt status, ineligibility to issue donation receipts, and payment of a revocation tax pursuant to section 188 of the ITA) (Fortius at para. 31). To accept the argument that a reduction in donations, for example, invariably satisfies the second branch of the RJR‑MacDonald test in all circumstances would "“effectively eliminate that element of the test in relation to each and every application made pursuant to paragraph 168(2)(""b) of the ITA”" (Holy Alpha and Omega Church of Toronto v. Canada (Attorney General), 2009 FCA 265, [2010] 1 C.T.C. 161 at para. 22 (Holy Alpha)).
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IV. Balance of Convenience
[39] The third prong of the tripartite test requires that the Court assess the balance of convenience, involving "“a determination of which of the two parties will suffer the greatest harm”" should the interim relief be granted or refused (Slepcsik at para. 99; Canada (National Revenue) v. Shopify Inc., 2025 FCA 232 at para. 24 (Shopify); Ostrich Farms at para. 50; RJR‑MacDonald at p. 342; Manitoba (Attorney General) v. Metropolitan Stores Ltd., 1987 CanLII 79 (SCC), [1987] 1 S.C.R. 110, 1987 CarswellMan 176 at para. 36).
[40] Where the moving party applies for interim relief against a public authority, the public interest, which the agency is created to protect must be taken into account and weighed in the balance, along with the interests of private litigants (RJR-MacDonald at p. 343; Ostrich Farms at para. 50; Slepcsik at para. 100). Where a stay restrains the actions of a public authority charged with the duty of promoting or protecting the public interest and where its actions were undertaken pursuant to that responsibility, irreparable harm to the public interest is nearly always established (Ostrich Farms at para. 50 citing RJR-MacDonald at p. 346). I will explain why, in this context, that is so.
[41] First, the public has a legitimate interest in the exercise of CRA’s statutory mandate to enforce the obligations applicable to registered charities under the ITA (Fortius at para. 39; see also Cheder Chabad at para. 32). The CRA’s enforcement of these obligations protects both the public’s confidence in registered charities as well as the interest of potential donors (International Charity Association Network v. The Queen, 2008 TCC 3, [2008] 4 C.T.C. 2064 at paras. 76–77). This public interest attracts significant weight in the analysis of the balance of convenience (Fortius at para. 39; Ostrich Farms at para. 50; Glooscap at para. 53).
[42] Second, the Minister has a statutory responsibility to protect the public interest in ensuring that registered charities fully comply with the requirements of continued registration. In exercising his duties under the ITA, absent evidence to the contrary, the Minister is assumed to be acting in the public interest and in good faith (Cheder Chabad at para. 33).
[43] The public interest is not an amorphous value. There is a strong public interest in ensuring public confidence in the charitable sector. Public confidence that charities are operating in full compliance within the law protects taxpayers and encourages charitable giving. Secondly, as between charities competing for a finite pot of donations from the public, there is a strong public interest in ensuring that donations are directed to charities that in fact comply with the requirements of the ITA.
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[48] Finally, Central challenges the Minister’s reliance on Glooscap, and the argument that the weight to be accorded to the public interest is "“driven up”" where the charity has received previous warnings (Glooscap at para. 53). It notes that, in Glooscap, the charity continued to participate in an illegitimate tax-avoidance scheme, despite warnings from its accountant and Minister. The Court found that the charity’s involvement with the tax shelter was "“central”" in the application before it.
[49] The facts of Glooscap are indeed different than those before the Court on this motion. Nevertheless, the alleged failure of Central to adhere to the Compliance Agreement weighs heavily against it in assessing where the balance of convenience lies. While I accept that, at this point, the breaches of the Compliance Agreement have not been proven on the merits, the asserted failings are serious and widespread, touching virtually every aspect of Central’s financial controls, receipting practices, governance and use of funds. Central has not established that the balance of convenience lies in its favour. . Malone v. Canada
In Malone v. Canada (Fed CA, 2026) the Federal Court of Appeal considered the charitable gift element of 'donative intent':[6] The appellants also submit that the Tax Court erred in concluding that: (a) they lacked "“donative intent”", one of the necessary elements of establishing a charitable gift: Friedberg v. R., 1991 CanLII 14017 (FCTAD), [1991] F.C.J. No. 1255 (F.C.A.) at para. 4; Mariano at para. 17; ....
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[9] On the issue of donative intent, the appellants submit that the Tax Court did not consider testimony about their charitable intent regarding the GLGI transactions or their broader history of charitable donations. The appellants’ general history of charitable giving is not relevant to the issue of "“donative intent”" regarding the GLGI and the Tax Court did not err in failing to consider this or explain why. While a taxpayer’s subjective intent regarding the transaction at issue may be relevant, the test for donative intent is ultimately an objective one. It considers whether the donor intended to impoverish themselves, based on all the circumstances: Symes v. Canada, 1993 CanLII 55 (SCC), [1993] 4 S.C.R. 695 (S.C.C.) at p. 736; Walby v. Canada, 2025 FCA 94 at para. 50. The Tax Court properly applied this test, expressly considered the appellants’ "“win-win”" testimony that included a desire to help people in need (TC Reasons at para. 26), and concluded that the expectation of a tax refund significantly exceeding the cash contributed meant that they lacked donative intent: TC Reasons at paras. 23–26. There is no reviewable error in that conclusion. . 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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