Question Period Note: CHARITABLE REGISTRATION – ADVANCEMENT OF RELIGION ABROAD

According to an analysis by La Presse, in the last 5 years more than $700 million in public funds have been used to finance religious organizations abroad via Canadian registered charities, including to some nations with whom Canada has had past enmities. Can the CRA explain why this has occurred?

• The Canada Revenue Agency (CRA) grants registered charity status to organizations that apply and meet all the registration requirements of the Income Tax Act.

• In order to be registered as a charity, an organization must be formed exclusively for charitable purposes and devote all of its resources to activities that further those purposes.

• Charitable purposes fall into four categories: the relief of poverty, the advancement of education, the advancement of religion, and other purposes beneficial to the community that the law regards as charitable.

SUPPLEMENTARY RESPONSE

• Under Canadian law, most activities that are charitable in Canada are also charitable abroad.

• To advance religion - in the charitable sense - means to promote the spiritual teachings of a religious body and maintain doctrines and spiritual observances on which those teachings are based. There must be an element of theistic worship, which means the worship of a deity or deities in the spiritual sense.

On May 20, 2025, La Presse published an article containing its own analysis noting that in the last five years more than $700 million in public funds have been used to finance religious organizations abroad via Canadian registered charities, including to some nations with whom Canada has had past enmities.

The Canada Revenue Agency (CRA) is responsible for promoting and enforcing compliance within Canada’s charitable sector, which is comprised of approximately 86,000 registered charities and approximately 4,500 other qualified donees.

Registration and monitoring of the charitable status of organizations is a non-partisan regulatory process maintained independently by the Canada Revenue Agency.

Registering a charity is a comprehensive process, which includes in-depth research and analysis of an applicant organization’s structure and mode of operation.

In order to be registered as a charity, an organization must be constituted exclusively for charitable purposes and devote all of its resources to activities that further those purposes. Charitable purposes fall into one or more of the following categories: the relief of poverty, the advancement of education, the advancement of religion, and other purposes beneficial to the community.

The term charitable is not defined in the Income Tax Act, so the CRA relies on common law (court decisions) to determine what is charitable.

A registered charity’s purposes must also provide a tangible benefit to the public as a whole, or a significant section of it. In addition, purposes and activities that are illegal in Canada or contrary to Canadian public policy are prohibited.

The CRA applies the same standard whether the applicant organization intends to operate a religious organization, or carry on any other type of charitable activity.

Registered charities must keep adequate books and records to allow the CRA to verify donations made to the charity, to ensure the proper use of charitable resources, and that the charity's purposes and activities continue to be charitable.

The Pre-Budget Consultations in Advance of the 2025 Budget Report of the Standing Committee on Finance was adopted by the Standing Committee on Finance on December 10, 2024, and presented to the House of Commons on December 13, 2024. The Report included numerous recommendations, noting specifically the recommendation #430, “Amend the Income Tax Act to provide a definition of charity which would remove the privileged status of “advancement of religion” as a charitable purpose.

The CRA is responsible for administering the tax system and applying the current tax legislation, while the Department of Finance is responsible for developing and changing federal tax policy and legislation.

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