On August 6, 2014, the Supreme Court of New Zealand allowed an
appeal by Greenpeace of New Zealand Inc. ("Greenpeace"),
finding generally that an organization cannot be prevented from
registering as a charity, or be removed from the register of
charities, on the basis that it has a political purpose.
Prior to this decision, the law of New Zealand had been interpreted
such that an organization could be prevented from registering, or
removed from the register, if it was considered to have political
purposes that were not merely ancillary to its charitable
purposes. The law was being interpreted in this way since the
wording of the legislation seemed to contemplate a blanket
prohibition on "non-ancillary" political purposes.
Despite the wording of the legislation, the Supreme Court of New
Zealand in this case ultimately held that any political purpose
(which may or may not include advocacy) can also be a charitable
purpose. In the Court's view, the assessment of whether a
political purpose is also a charitable purpose depends on whether
that particular political purpose can be said to have a
"public benefit" as determined by the courts.
The background to this appeal was that Greenpeace had been
denied registration in New Zealand on the basis that its political
purposes were "not merely ancillary" to its charitable
purposes (i.e., secondary, subordinate, or incidental) but were
rather "independent purposes" of the organization.
Its stated objects and purposes at that time included: "the
promotion of legislation, policies, rules, regulations and plans
which further [Greenpeace's objectives] and support their
enforcement or implementation through political or judicial
processes as necessary."
When the issue reached the Supreme Court, the case turned on
whether New Zealand should continue to follow the status quo or
whether the political purposes of Greenpeace could somehow also be
charitable (i.e., whether or not political purposes and charitable
purposes would continue to be mutually exclusive). Greenpeace
argued that it should be possible for its political activities to
be characterized as charitable in itself, provided that a public
benefit could be established. The Supreme Court agreed.
In its view, "an absolute rule that promotion of legislation
is never charitable is hard to justify." The Court
further stated, "the law of charities changes in response to
change in social conditions... [and, therefore] advocacy for a
change in law is charitable."
A practical concern arising from this decision is that
previously, New Zealand courts were only required to distinguish a
political purpose from a charitable purpose. Going forward, the
courts will be required to undertake the potentially difficult task
of determining when a political purpose has a "public
benefit". In the case of Greenpeace, the Supreme Court
declined to give a ruling on the basis that this was a question of
fact, which in the normal course is decided by a trial court.
In other words, it will not be possible to know the outcome of this
case until the "public benefit" issue is re-heard by the
appropriate deciding body.
Viewed from a Canadian perspective, this is a novel decision
since the Canadian courts have not recognized political purposes as
charitable. Under the Income Tax Act (Canada),
charities may engage in non-partisan political activities, such as
the promotion of new legislation, to a very limited extent.
To date, where CRA is of the view that the amount of a
charity's political activities is above the 10% limit, it has
argued that the excessive activities are indicative of a collateral
political purpose which is not charitable. Although foreign
case law such as this decision from New Zealand is not binding on
Canadian courts, it can be persuasive. This case may be
helpful when dealing with the CRA on political activities
audits. It is also worth noting similar new developments in
other jurisdictions, especially when those developments contrast to
the direction we are seeing in the current domestic approach, which
has seemingly been to tighten the rules, as evidenced by the
CRA's recent political activities audits of certain Canadian
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.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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