A Canadian taxpayer who made $24,800 in charitable donations to the International Association of Scientologists has been denied tax credits by the Tax Court of Canada because the IAS is not a registered charity.
Nigel Hall argued that he had been unlawfully discriminated against because other Canadians had access to tax credits if they chose to donate to registered charities. Income Tax Act provisions requiring a “qualified donee,” he maintained, violate the Charter of Rights.
But the court ruled that there was no Charter breach because no one who donated to non-registered charities was entitled to tax credits. The statutory scheme of registered charities also did not offend the Charter because no specific group was barred from applying for registration.
Interestingly, there was no dispute that IAS conducted what were normally considered charitable or charitable-like activities. Because IAS was not created or established in Canada, however, it is unlikely that it could have qualified for registration – - – although the Tax Court does not deal with this question.
“The decision is [also] silent on the more interesting point of whether IAS could create a Canadian entity and apply for and obtain charitable registration,” notes William Innes of Rueter Scargall Bennett in William Innes on Tax Litigation. If, on the other hand, the application were denied would that possibly give rise to a Charter violation?”