Will Liberals Remove Charitable Status for Churches in Canada?

Questions have circulated about whether the Liberal government will remove the charitable status of churches and faith-based groups in Canada.

This issue gained attention after recommendations from a parliamentary finance committee suggested changing the Income Tax Act to strip religious organizations of their privileged charitable status.

Liberal MP Karina Gould, chair of the House of Commons Standing Committee on Finance, has made it clear that the government will not revoke the charitable status of religious organizations.

The government respects the role churches and faith communities play in Canadian society and plans to maintain their current status under existing rules.

Concerns remain for pro-life groups, which have faced a longer debate about charitable status.

This ongoing discussion highlights the complex balance between government policy and the social contributions of religious groups across the country.

Recent Proposals to Change Charitable Status for Churches

The Canadian government has seen discussions about changing how churches and religious groups keep their charitable status.

These ideas center on redefining what counts as a charitable purpose under the Income Tax Act.

The Finance Committee played a key role in drafting and recommending these changes.

If adopted, the proposals would affect many religious organisations that rely on charitable status for funding and tax benefits.

The Origin and Content of Recommendation 430

Recommendation 430 comes from a report by the House of Commons Finance Committee, tabled in December 2024.

It suggests changing the Income Tax Act to remove "advancement of religion" as an explicit charitable purpose.

This means that religious organisations, including churches, would no longer automatically qualify for charitable status based solely on their religious nature.

The recommendation aims to redefine what is considered a charity, focusing on secular or neutral grounds.

It parallels a separate recommendation (429), which targets anti-abortion organisations.

While this is not a law change yet, it signals a potential shift in how the Canadian government could treat religious charities in the future.

Role of the Finance Committee

The Finance Committee is a group within the House of Commons responsible for reviewing fiscal policies and making recommendations to the government.

Their report included hundreds of suggestions, with two key ones addressing charitable status related to religion.

Though these recommendations influence government decisions, they are not binding laws.

The Minister of Finance has the discretion to accept or reject them.

The committee’s work sparked debate but has not yet resulted in legislative changes.

Political parties such as the Liberals, NDP, and Conservatives have expressed various views, but no official steps have been taken to revoke charitable status from churches.

The timing of the recommendations coincided with a federal election cycle, which has paused immediate action.

Implications for Religious Organizations

About 40% of registered charities in Canada are religious, including most churches.

Losing charitable status would mean these organisations could no longer issue tax receipts for donations.

This could reduce financial support and limit their community services.

Faith-based groups argue that their charitable status recognises the vital social roles they play.

Many provide volunteer hours and donations that benefit broader society.

Removing this status risks cutting funding for programs related to social support, education, and counselling run by these groups.

The proposal also raises concerns about fairness, as it targets religious organisations while allowing other charities to keep their status.

For now, no changes have been implemented, but religious groups continue to watch government moves closely and encourage dialogue with elected officials.

Current Political Landscape and Party Positions

The debate over the charitable status of churches in Canada involves several political parties and government bodies.

The discussion has centred on recent committee recommendations and the government's federal budget plans.

Party views vary, affecting how religious charities may be treated going forward.

Liberal and NDP Policy Response

The Liberal government, led in part by MP Karina Gould, has made it clear that the charitable status of faith-driven non-profits, including churches, will not be revoked in the upcoming federal budget.

Despite committee recommendations in late 2024 to remove this status for religious groups, the current Liberal stance is to maintain existing rules.

The NDP, aligned with the Liberals on several financial committee matters, has supported the push to reconsider charitable status for some religious and pro-life groups.

However, official government messaging emphasises respect for faith-based community roles and denies any immediate plan to change legal or tax frameworks affecting religious charities.

Conservative Party Opposition

The Conservative Party has strongly opposed moves to strip charitable status from religious groups.

Conservatives argue that such changes would undermine long-standing definitions of charity under Canadian law and could harm social services provided by churches.

They highlight the financial contributions of religious organisations to the economy and warn against government overreach.

Prominent Conservative voices frame the issue as part of protecting constitutional freedoms and respecting the role of faith communities in Canada’s social fabric.

Influence of Bloc and Other Parties

The Bloc Québécois and other smaller parties contributed to the debate, with the Bloc notably supporting recommendations to remove religion as a charitable purpose.

This position adds pressure to the issue, complicating the landscape.

Although no party has officially endorsed removing charitable status entirely, the Bloc’s influence alongside committee recommendations signals ongoing political tension.

These dynamics have ensured that the fate of charitable status for churches remains uncertain but politically sensitive.

Understanding the Charitable Status of Churches in Canada

Churches in Canada hold a special legal position through charitable status, which grants them significant tax advantages.

This position is based on specific legal definitions and rules under the Income Tax Act, primarily centred on the concept of "advancement of religion" as a charitable purpose.

These frameworks affect how churches receive donations and how they operate financially.

Definition of Charitable Purpose

In Canadian law, a charitable purpose is a reason that an organisation can claim to serve the public good.

The Income Tax Act lists four main purposes that qualify for charitable status: the relief of poverty, the advancement of education, the advancement of religion, and other community benefits.

For churches, the advancement of religion is the key charitable purpose.

This means they must primarily focus on religious activities to maintain their status.

Other activities can support this purpose but cannot be the main focus if the organisation wants to keep its charitable status.

Advancement of Religion as a Legal Basis

The advancement of religion has been a recognised charitable purpose in Canada for hundreds of years, rooted in British legal tradition.

It allows churches and other faith-based groups to issue tax receipts for donations, encouraging public giving.

This status also reflects the principle that the state generally does not interfere with religious institutions financially.

Churches provide social services and community support, which governments often see as benefiting society.

Removing this legal basis would change how churches are treated under law and tax policy.

Tax Exemption Framework

Charitable status under the Income Tax Act provides churches with several tax benefits.

Most notably, they can issue tax receipts to donors, who use these to get tax deductions.

This system helps churches raise funds by making donations more attractive.

Churches are also normally exempt from paying income tax.

In some cases, local governments may exempt church property from property taxes, though this varies.

If charitable status is revoked, these tax exemptions could end, increasing operational costs for religious organisations.

Potential Impacts on Canadian Society and Religious Charities

Removing charitable status from churches would affect donations, volunteerism, and the delivery of important community services.

The change could reduce financial support for many religious groups and harm social programs that serve vulnerable Canadians.

Effect on Donations and Volunteerism

Churches and religious charities rely heavily on donations.

Losing charitable status would mean they can no longer issue tax receipts, removing a key incentive for donors.

This could lead to a significant drop in contributions, weakening the financial base of many faith groups.

Donors often give because their gifts are partly offset by tax credits worth 15% to 33%.

Without these benefits, many might reduce or stop giving altogether.

This drop in donations could force religious charities to scale back programs or close.

Volunteerism could also decline.

Faith communities mobilize thousands of volunteers each year.

A loss of resources might reduce volunteer engagement and the capacity of churches to organise programs that depend on volunteer support.

Community Services Provided by Churches

Religious charities in Canada offer many essential services.

These include programs that go beyond worship, such as addiction support, youth mentoring, and settlement services for newcomers.

Many of these programs help people regardless of faith.

Churches, mosques, and synagogues act as key community hubs, delivering social aid where government services may be limited.

Losing charitable status could limit their ability to operate these vital services.

Funding reductions could lead to fewer resources for staffing and program delivery.

This outcome would affect thousands of Canadians who depend on support from religious organizations every day.

Food Banks and Social Programs

Faith-based charities run many of Canada’s food banks and emergency shelters.

They provide meals, clothing, and temporary housing to people in need, often filling gaps left by government programs.

Church-run food banks feed thousands of families regularly.

Many religious groups also offer addiction counselling and mental health support through their programs.

If churches lose charitable status, reduced donations and funding would threaten these services.

The impact would be felt not only by religious communities but by all Canadians who rely on faith-based social programs for help in times of crisis.

Debate Over Secularism and Public Policy

The discussion about removing charitable status for churches in Canada revolves around how religion fits within a secular government and the effects on public policy.

The debate highlights conflicting views on fairness, tax benefits, and the consultation process used by the Canadian government.

Secular Arguments for Removing Status

Supporters of removing charitable status for religious groups argue that the government should treat all organisations equally regardless of faith.

They believe that giving churches tax breaks is unfair and inconsistent with a secular state.

Religious organisations receive millions in tax exemptions, which critics say could be better used for public services.

Some also claim that allowing churches to keep charitable status may let them influence public policy based on religious beliefs, which could conflict with secular laws and values.

This perspective suggests removing status would help separate religion from government funding and policy decisions.

Public Policy Considerations

The government must balance tax revenue needs with the social benefits that churches provide.

Religious groups offer many community services like addiction recovery, childcare, and refugee sponsorship, which would be affected by any change.

Key public policy concerns include:

• Loss of tax revenue if exemptions continue
• Impact on social programs run by churches
• Risk of increased municipal property taxes on church buildings
• Effects on donations, since tax receipts might no longer be issued

The government needs to consider these economic and social factors carefully before altering charitable status rules.

Pre-Budget Consultation Process

The 2024 pre-budget consultation by the House of Commons Standing Committee on Finance raised this issue without broad input from religious organisations.

The committee’s recommendations included removing charitable status for anti-abortion groups and ending “advancement of religion” as a charitable purpose.

Religious charities made up about 40% of registered Canadian charities but were not formally consulted.

The committee was influenced largely by secular groups seeking to restrict tax breaks.

The process has faced criticism for not thoroughly engaging all stakeholders or clearly explaining the rationale behind the recommendations.

Broader Implications: Anti-Abortion Organizations and Other Movements

The proposed changes to charitable status in Canada focus on specific groups, including anti-abortion organisations.

These changes also raise questions about the future of religious charities more broadly and how they fit into Canada’s charitable sector.

Recommendation on Anti-Abortion Organizations

The Finance Committee recommended ending charitable status for anti-abortion organisations.

This move targets groups whose main activities oppose abortion.

Losing charitable status means these organisations would no longer issue tax receipts for donations.

This could reduce their funding significantly, as donors would not get tax deductions.

The recommendation is part of a wider debate over the role of beliefs in determining charitable status.

Removing this status for anti-abortion groups reflects a shift toward limiting charity recognition based on positions that the government may view as harmful to society.

Wider Charitable Sector Considerations

The Finance Committee also suggested removing the special status currently given to religious charities under the Income Tax Act.

This change could affect over 40% of registered charities in Canada, many of which are faith-based organisations.

Removing charitable status could reduce funding and force many charities to cut services.

It would change how religion is recognised in the charitable sector.

Other charities like hospitals and education groups would not be affected directly, but religious and value-based charities may lose significant support.

This shift could reshape the social safety net in Canada, as faith-based groups often provide key support services.

The impact on communities that rely on these organisations could be substantial.

Conclusion

Those concerned about the potential removal of charitable status for churches in Canada should seek expert advice. It is important to understand the legal and social impacts of this issue.

The situation is complex and can have significant consequences for faith-based organizations and the communities they serve.

At B.I.G. Charity Law Group, we offer guidance on this evolving matter. We invite anyone affected or interested to contact us at dov.goldberg@charitylawgroup.ca or 416-488-5888.

More information is available at CharityLawGroup.ca.

We invite you to schedule a FREE consultation with our team to discuss your specific concerns.

Frequently Asked Questions

Several important points often arise around churches and their legal standing in Canada. These include their charitable status, government funding, and how laws affect their religious practices.

Do churches have charitable status in Canada?

Yes, churches in Canada generally have charitable status. This allows them to issue tax receipts for donations and receive certain tax benefits.

The advancement of religion is one of the four main purposes recognized by Canadian law for granting charitable status.

Do churches get government funding in Canada?

Churches do not receive direct government funding. Their charitable status can indirectly support them by encouraging donations through tax incentives.

This helps churches raise funds from private donors who receive tax deductions.

How do you revoke charitable status?

Charitable status can be revoked if an organization fails to follow rules set by the Canada Revenue Agency (CRA).

This may include misuse of funds, engaging in prohibited political activities, or no longer meeting the legal definition of a charity.

Revoking status requires formal government action, usually after recommendations and legal procedures.

What does it mean for a church to be liberal?

A liberal church often embraces progressive views on social issues, such as gender equality and LGBTQ+ inclusion.

It also supports open interpretation of religious texts, which distinguishes it from more conservative churches.

Is it legal for a local government to restrict a religious practice of it?

Local governments in Canada have limited power to restrict religious practices. Restrictions must comply with the Canadian Charter of Rights and Freedoms.

Any restriction needs to balance public safety, health, or order with the right to freedom of religion.

What prevents the government from prohibiting the practice of most religious beliefs?

The Canadian Charter of Rights and Freedoms protects freedom of conscience and religion.

This prevents the government from banning most religious beliefs or practices.

Limitations can only occur if the practice conflicts with other important legal rights or public interests.

Any limitation must be justified in court.