Revenue Canada's political activity audits biased, think-tank says

Dean Beeby / CBC

The Broadbent Institute is calling for an independent probe of the Canada Revenue Agency, saying tax auditors are targeting critics of the Harper government while letting right-leaning groups off the hook.

The self-style "progressive" think-tank released a research report Tuesday citing recent public statements by 10 "right-leaning" or "conservative" charitable groups that it says are political, yet the groups reported no political activities in their mandatory annual statements to the tax agency.

The report says many charities that have opposed government policies have been hit with political-activity audits while other groups, such as the C.D. Howe Institute and the Macdonald-Laurier Institute, have escaped such scrutiny despite their apparently political statements in the past.

"The findings in this report serve to deepen suspicions of the Harper government's continued and deliberate silencing of critical voices," says the document.

"The mounting evidence of a politicized CRA merits the establishment of an independent inquiry into its processes to ensure transparency and fairness."

At issue are a series of 52 political activity audits first launched in 2012 under a new $8-million, two-year program announced in the federal budget that year, a program later topped up to $13.4 million and made permanent.

Auditors first targeted a group of environment charities which have been critical of energy and pipeline policies and who were vilified by several cabinet ministers at the time as radicals and money launderers. The net has been cast more widely since, selecting charities that promote social justice, poverty reduction and religion.

Charities are permitted to devote up to 10 per cent of their resources to political activities, but critics say the definitions in the regulations can be complicated and unclear. Partisan activities are forbidden entirely, such as endorsing a candidate for public office.

The Canada Revenue Agency and National Revenue Minister Kerry-Lynne Findlay have each dismissed repeated allegations that the government directs which charities to audit, saying the choice is made by competent public servants based on objective evidence, drawing on material posted on websites and other sources.

The agency will not release a list of targeted charities, but most of the groups who confirm they are being audited for political activities have made public statements in the past taking issue with Harper government policies. Two charities, the C.D. Howe Institute and the Macdonald-Laurier Institute, have confirmed they are not being audited, but others — such as the Fraser Institute — have declined to comment.

The Broadbent Institute report examines the public statements of 10 groups and claims to have found many that are overtly political, yet none of the groups reported any political activity to the CRA.

"The evidence presented here is not intended to question whether these charities should or shouldn't be engaged in political activity," says the report.

"Rather, it is meant to raise questions about how the CRA's definition of political activity is being interpreted and the transparency of the CRA's process for determining which groups to audit."

The report cites a 2013 statement by the Atlantic Institute for Market Studies, for example, that calls on the federal government to "wind down Canadian content requirements and foreign ownership restrictions in the communications sector." The institute has not responded to questions about whether it is being audited for political activities.

"There's clearly wildly varying interpretations of what CRA means by political activity," Rick Smith, executive director of the Broadbent Institute, said in an interview from Toronto.

"Whether CRA is being even-handed or not, or is being used as a tool of harassment by the federal government directed at critical charities, is an important question for the health of Canadian democracy."

The institute's call for an independent inquiry repeats an earlier call by New Democrat MP Murray Rankin, the party's revenue critic, who has said a retired judge or other credible person with no link to government should be called in to review the program.

No charity has so far been stripped of its charitable registration under the new political-activity audit program, though the CRA has imposed some onerous conditions on some groups. Targeted charities say the audits drain them of scarce cash and resources, such as staff time, and critics say the audits have led to "advocacy chill" as some groups fear speaking out.

The Broadbent Institute reports follows a CBC News report that the CRA has been scrutinizing a small birdwatching group in Kitchener, Ont., for its alleged political activities.

The group, with revenues of just $16,000 a year, was sent a five-page "reminder letter" earlier this year after agency auditors determined some comments on their webpage to be political, and warned they were not ruling out an audit.