Canada: Election 2019: Is Your Issue At Issue? What You Need To Know About Third Party Advertising

Environmental charities will try to make the global climate emergency an election issue during this fall's federal campaign. Doing so, however, could require them to register as third parties, according to Elections Canada. This interpretation of the Canada Elections Act ("CEA") has led to concern, confusion, and commentary about what is – and should be – covered by the CEA's third party election advertising rules.

This election law primer addresses some important considerations with regard to third party advertising and the potential interface between the CEA and the Income Tax Act ("ITA") as they apply to registered charities. It is intended as general guidance only. If you have any specific questions or concerns, please contact Awi Sinha or Adam Goldenberg in our Government Law group. We would be pleased to assist you.

Why the fuss?

Recent media reports revealed that, at an Elections Canada training session earlier this summer, attendees were warned that their climate-crisis-awareness-raising efforts could be regulated under the CEA.

The People's Party of Canada (the "PPC"), led by Maxime Bernier, challenges the science of climate change. At the training session, according to the media, climate crisis messaging and Mr. Bernier were used to illustrate how "issue advertising" that does not mention a party or candidate could be considered "election advertising" under the CEA, and subject to the third party rules once the campaign is officially underway.

Alarm ensued. Many stakeholders, and indeed Mr. Bernier, criticized the position. The CEA requires all third parties that spend more than $500 engaging in "partisan activity", "partisan advertising", or "election advertising" to register and abide by spending limits. Does awareness-raising about the climate crisis qualify as "election advertising"? And, if it does, how might that affect environmental charities' registrations under the ITA?

The gap between the CEA and the ITA

Canada Elections Act

The CEA defines "election advertising" as:

"Election advertising" thus includes what is known colloquially as "issue advertising". According to Elections Canada, non-partisan climate advocacy could qualify. Because of the PPC's position, even promoting awareness of the reality of anthropogenic global heating could be considered "taking a position on an issue with which a registered party or candidate is associated" within the meaning of the CEA.

This reflects a very broad interpretation of the CEA by Elections Canada. Chief Electoral Officer Stéphane Perrault has confirmed that, in Elections Canada's view, all issue advertising during the election – regardless of whether a candidate or party is mentioned – is covered by the CEA, and that spending more than $500 on such advertising will require registration as a third party. Elections Canada neither considers the substance of the advertising nor attempts to distinguish between fact and opinion for the purposes of implementing the CEA.

On this reading of the CEA, even the most generic climate advocacy may be subject to the CEA's third party requirements. Still, the only practical implications of this are that more groups – environmental and otherwise – will need to register, report, and limit their expenditures during the campaign period.

The more practically consequential question is whether "taking a position on an issue with which a registered party or candidate is associated", within the meaning of the CEA, could compromise an organization's charitable status under the ITA.

Income Tax Act

Charities previously risked losing their charitable status if more than 10 percent of their resources were used for political activities. The Ontario Superior Court of Justice struck down that restriction as unconstitutional in July 2018, in Canada Without Poverty v. Canada (Attorney General). McCarthy Tétrault acted pro bono for the successful applicant, Canada Without Poverty, in the case. The government abandoned its appeal of the decision in January 2019.

Since Canada Without Poverty, the Canada Revenue Agency ("CRA") has issued guidance that, "under the Income Tax Act, a charity is free to advocate for any change to a law, policy, or decision of government that would further its stated charitable purpose". What is restricted is much more narrowly defined. Charities may not "communicate a message that supports or opposes a political party or candidate to the public", carry on an activity to support or oppose a party or candidate, or transfer resources to a party, candidate, or third party for the purpose of such support or opposition.  Communication about policy issues is explicitly permitted, including messages of support or opposition for "a law, policy, or decision of government that a political party or candidate also supports or opposes".

Amid the brouhaha over Elections Canada's interpretation of "election advertising" in the CEA, the CRA clarified that registering as a third party under the CEA "would not itself constitute support of, or opposition to, any political party or candidate". Charities can engage in information campaigns on issues associated with parties, "as long as the charity does not refer to, or otherwise identify, the political party or candidate". In other words, the ITA (as the CRA interprets it) catches fewer election-related activities than the CEA (as Elections Canada interprets it) does; issue advertising on climate change that does not mention a particular political party or candidate can be "election advertising" under the CEA without affecting a charity's registration under the ITA.

The bottom line

The CEA and the ITA are each concerned with the activities of charities during elections, but each has a different focus. The CEA seeks to ensure transparency in election-related public persuasion efforts, and requires registration and an accounting of funds raised and spent during an election period. The ITA seeks to ensure that tax incentives for charitable donations are not abused, and so requires consistent adherence to an organization's charitable mandate.

Before taking a public stand on an issue in the upcoming election, your organization should ask itself two key questions:

1. Do I want to register?

Registration as a third party with Elections Canada could result in additional scrutiny and publicity. This will be mitigated, however, by the significant number of groups that will likely have to register in light of Elections Canada's broad interpretation of "election advertising" under the CEA.

Any organization that spends at least $500 on communicating with the public about an election issue will, subject to certain legislated exceptions, need to register and abide by the CEA's third party rules. The alternative is to forgo such expenditures during the campaign.

2. Will this impact my charitable status?

So long as there is a valid charitable objective, no direct support or opposition to a party or a candidate, and no intent for such support or opposition, then an organization can undertake third party election activities without compromising its charitable status. The CEA's reach is more extensive than the ITA's in this respect.

If you or your organization is considering or participating in third party advocacy leading into or during the upcoming election, take the time to ensure that your internal policies and procedures comply with the rules outlined above.

Click here to learn more about what you need to know before you donate or advertise in the 2019 election.

This post is part of our 2019 federal election series. You can access related content here.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.