Federal committee urges end to religious tax deductions

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This article was published 25/01/2025 (253 days ago), so information in it may no longer be current.

Why should you get a charitable tax receipt for donating to the salary of your minister, priest or rabbi?

That’s the question asked by the B.C. Humanist Association — and now it’s also on a list of proposed recommendations for the federal government from the House of Commons Standing Committee on Finance.

In its report, titled “Pre-Budget Consultations In Advance Of The 2025 Budget,” the Committee recommends the next budget of the federal government “amend the Income Tax Act to provide a definition of a charity which would remove the privileged status of ‘advancement of religion’ as a charitable purpose.”

It’s one of 462 recommendations in the report, which was created following consultations with Canadians last summer. It is the first time that idea has appeared in the Committee’s report.

But first: What is the advancement of religion as a charitable purpose? It is one of four activities, or purposes, that charities can use to issue charitable tax receipts. The others are relief of poverty, advancement of education, and other purposes beneficial to the community.

These purposes are based on an 1891 decision in Great Britain called The Pemsel Case. It still informs our understanding of charity in Canada today.

As for what constitutes advancement of religion, the Canadian government defines it as things like preaching, religious education, paying to build and maintain places of worship and pastoral and missionary work.

The proposal to remove it as a charitable purpose was made by the B.C. Humanist Association — and not for the first time. But this is the first time the idea made it into the Finance Committee report, said executive director Ian Bushfield.

Given the uncertainty in Ottawa these days, Bushfield doesn’t think the idea will make it into the next federal budget. But he believes it will start a conversation among Canadians about the topic.

“Why should we privilege religion for charitable purposes at a time when Canada is becoming less religious?” he asked, noting that other groups, like a book club which serves a select group of members, can’t get charitable status.

“That’s a question that deserves larger consultation,” he said. “We would welcome that.”

Also glad to see the recommendation in the report is Leslie Rosenblood of the Centre for Inquiry Canada, a national Humanist organization.

“Canada is a secular nation, where the government is neutral, or is supposed to be neutral, in matters of religion, neither supporting nor suppressing religious expression,” he said, adding he is particularly concerned about people getting a tax receipt for giving to groups that exist to evangelize people from other religions.

For Rosenblood, it’s a long road from a Finance Standing Committee recommendation to becoming government policy.

“But I am hopeful that this step will be the first of the many required,” he added.

Unsurprisingly, organizations that represent religious groups are not in favour of the recommendation.

“We are very concerned about it,” said Julia Beazley, who directs public policy for the Evangelical Fellowship of Canada (EFC), the national association of evangelical Christians in Canada.

“The thousands of churches and faith-based organizations across Canada that are religious charities benefit their participants, their communities and Canadian society as a whole,” she said.

Beazley noted that religious charities play a significant role in Canadian life, with about 40 per cent of charities in Canada falling under the advancement of religion section of the Income Tax Act. This includes an estimated 23,000 Christian congregations.

If the recommendation is adopted, “the impact on Christian charities, and the people and communities they serve would be significant and far-reaching,” she said.

While it is unlikely the recommendation will be adopted this year, she noted it is “significant that a parliamentary committee has made this recommendation.”

Just as significant for her is that representatives from all the major political parties were members of the Committee and that none opposed the recommendation — including the members from the Conservative Party.

Ray Pennings is executive vice-president of Cardus, a Canadian Christian think-tank. For him, the proposed change “would be destructive for Canada’s charitable sector.”

The recommendation itself “came out of left field and was proposed without any public consultation, much less consultation among the many charities it would affect,” he said.

While it is “extremely unlikely” that any federal government will act on the recommendation in the near future, “the fact that the Commons finance committee made the recommendation sends an alarming cultural signal,” he said.

John Pellowe, CEO of the Canadian Centre for Christian Charities, acknowledged that not everyone in Canada is religious or goes to religious services. But, he said, religion is a “benefit to society” through the various ways congregations serve their communities through things like hosting food banks, sponsoring refugees and hosting meetings for groups that address issues like homelessness and addictions — the so called “Halo Effect.”

While Pellowe thinks there is “virtually no chance” the recommendation will be accepted now, he believes religious groups need to take it seriously. “If there is no pushback, it could go ahead,” he said.

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