Trinity Western University: Your Tax Dollars at Work

By: Saul Templeton

PDF Version: Trinity Western University: Your Tax Dollars at Work

Case Commented On: Trinity Western University v Nova Scotia Barristers’ Society, 2015 NSSC 25

Trinity Western University (“TWU”) claims it is a private religious institution. This is the explanation offered by the courts for denying students, staff and faculty at TWU protection under the Canadian Charter of Rights and Freedoms. This protection is denied even though it is generally accepted, even by supporters of TWU, that TWU’s Community Covenant, “indeed treat[s] LGBT people in a way that would have profoundly negative effects of [sic] their lives.” See Trinity Western University v Nova Scotia Barristers’ Society, 2015 NSSC 25 [NS Barristers’ Society] at para 251).

What does it mean for a university to be publicly funded? I am a tax scholar, so I offer a definition supported by tax policy. TWU is publicly funded because it receives significant tax benefits as a result of its registered charity status. TWU is tax exempt, and therefore underwritten by public funding. The tax exemption is equivalent to a direct subsidy to TWU, since it represents tax revenue forgone, and governments must make up the shortfall elsewhere. TWU also issues charitable tax receipts that allow (and encourage) donors to give more money to TWU than they otherwise could, since the state gives donors a kickback on their taxes for doing so.

For reference, the objectionable terms of the Community Covenant that TWU students and employees are required to sign are as follows:

In keeping with biblical and TWU ideals, community members voluntarily abstain from the following actions:

  • sexual intimacy that violates the sacredness of marriage between a man and a woman


Further, according to the Bible, sexual intimacy is reserved for marriage between one man and one woman, and within that marriage bond it is God’s intention that it be enjoyed as a means for marital intimacy and procreation.

The Community Covenant binds employees and students: “Sincerely embracing every part of this covenant is a requirement for employment. … Students sign this covenant with the commitment to abide by the expectations contained within the Community Covenant”.

How TWU’s Tax Subsidies Work

[Those who are already familiar with the mechanics of charitable tax credits and the concept of tax expenditures can safely scroll down to the next heading, “TWU’s Registered Charity Status Should Be Revoked]

In the late 1960s, Stanley Surrey, at various times a Harvard Law School professor and Assistant Secretary of the US Treasury for Tax Policy, revolutionized the world’s understanding of tax policy by identifying tax expenditures as items of government spending. It is because of Stanley Surrey’s contributions to tax policy that the Canadian Department of Finance publishes an annual Tax Expenditures and Evaluations budget, estimating the amount of revenue foregone by the Canadian government in offering various tax preferences, or expenditures.

Government revenue foregone is equivalent to spending; e.g., the Child Fitness Tax Credit is projected to cost an estimated $115,000,000 in 2013 alone. The Child Fitness Tax Credit, by reducing tax payable by taxpayers who qualify, is equivalent to writing cheques to qualifying taxpayers to the tune of a projected $115,000,000 in 2013. That is the amount the federal government would have collected from families whose children are involved in qualifying activities – but chose not to collect in order to encourage parents to enroll their children in fitness activities. Tax spending measures like the Child Fitness Tax Credit are often sold to the public as tax cuts, when they are in fact a form of government spending that reduces government revenue and therefore reduces annual surpluses, or increases annual deficits.

The federal government’s annual expenditure budget comes with some caveats. Finance’s calculations, meant to estimate the increase in revenue if the tax spending measures were removed, assume no change in the underlying tax base as a result of removing each expenditure measure addressed. Removal of one of these expenditure measures could change the behavior of taxpayers, might require other changes in government policy, and could impact the economy generally. Nevertheless, the estimates of expenditures on charitable donations are large enough to be significant even if they are not exact. Charitable donations are the very first item in the 2013 federal tax expenditure budget, and figures on expenditure estimates and projections, below, are sourced from that document unless otherwise noted.

The government has made a policy decision to underwrite private donations to charity. TWU is a registered charity. Donations to TWU qualify for the Charitable Donations Tax Credit, a tax subsidy provided to taxpayers who donate to registered charities and receive charitable donation receipts. Federally, the charitable tax donation credit is calculated as 15% of the first $200 of donations (the lowest federal rate), and 29% (the highest federal rate) of amounts donated over $200. (The highest tax rate is used to compute the tax credit for donations over $200, even if the taxpayer is not earning enough income to be taxed at the highest rate, federally). Thus, if an individual donates $1,000 to a registered charity, the federal portion of their credit will be calculated as follows:

$200 x .15

= $30

$800 x .29

= $232

Total federal credit:

$30 + $232

= $262

The value of the federal portion of the credit alone is $262: this is the amount the individual can subtract from their federal tax payable. The credit is economically equivalent to a system where there is no subtraction from tax payable, and the federal government instead writes a cheque to the taxpayer for $262. (The credit is non-refundable, so a taxpayer who would not otherwise owe taxes federally does not receive this benefit; also note the credit is available for up to 75% of an individual’s net income donated in a year, until the year of death when it can be claimed against 100% of net income).

The amount spent on reductions of tax for charitable donors by the federal government in 2013 alone is a projected $2,225,000,000, or $2.225 billion. That figure does not include the double tax benefit of donating publicly listed securities to registered charities: those donations qualify for a charitable donation tax credit and the donors are exempt from capital gains tax on any accrued gains on the shares. Charitable tax credits for the donation of publicly listed securities (it is mostly high net worth individuals who can afford to make these types of donations) are projected to cost the federal government $125,000,000 in 2013 alone, and the non-taxation of capital gains on those shares is projected to cost the federal government, and by extension all Canadian taxpayers, $32,000,000. TWU’s Schedule 5: Gifts In Kind tells us that TWU received publicly traded securities that qualified for this additional tax benefit in its 2014 fiscal period. However, the redacted version of TWU’s Registered Charity Information Return does not tell us the value of receipts issued for those securities or the total benefit to donors from the non-taxation of their capital gains.

The new federal First-Time Donor’s Super Credit, intended to incentivize first-time charitable donors, allows a total credit of 40% of the first $200 donated and 54% of donations over $200, up to $1,000. So a donation of $1,000 would yield a federal credit of $512 ($80 on the first $200 and $432 on the next $800). This figure does not include provincial credits, so that the total credit would end up refunding the charitable donor well over 50% of his or her donation. The First-Time Donor’s Super Credit is projected to cost $20,000,000 in 2013. Query who will take advantage of this credit? Low income individuals who donate for the first time (typically young people) might give $10 or $20 to a friend who is doing a bike ride for the Heart and Stroke foundation. If even such a small donation has been made since 2007, it disqualifies the taxpayer from taking advantage of the First-Time Donor’s Super Credit. I leave it to the reader to speculate on what socio-economic segment of the Canadian population can afford to give a full $1,000 as a first time donation, and claim the credit against tax otherwise payable.

Alberta has an especially generous provincial tax credit for charitable donations. We have a flat income tax rate of 10%, and we use that rate to calculate the credit for donations up to $200. We use a much higher rate of 21% for donations over $200. That high rate is intended to provide a total credit of 50% (when the 21% is combined with the federal 29% rate) of donations over $200. In combination with the First-Time Donors’ Super Credit, our provincial credit is far more generous than even a 50% credit. The provincial portion of the charitable tax donation credit in Alberta, for someone who does not qualify for the First-Time Donor’s Super Credit, on $1,000 would be calculated as follows:

$200 x .10


$800 x .21

= $168

Total Alberta Credit: $168 + $20

= $188

So for an individual resident in Alberta who does not qualify for the First-Time Donor’s Super Credit, the total tax credit available to the donor is:

$262 [federal credit] + $188 [Alberta credit]

= $450

An individual resident in Alberta who does qualify for the First-Time Donor’s Super Credit would receive the following:

$512 [federal credit plus super credit] + $188 [Alberta credit]

= $700

An individual in Alberta who qualifies for the federal First-Time Donor’s Super Credit therefore receives a tax benefit of 70% of their total donation of $1,000. The CRA has a charitable tax credit calculator for any donation amount, depending on your province of residence and whether or not you are a first time donor.

At first glance, it appears that this tax credit benefits the donor alone. However, in tax policy it is recognized that taxes and tax subsidies can be passed on to parties not legally targeted by a tax measure. For example, property taxes can be shifted from land owners to tenants with an increase in rent, and tax subsidies might not benefit the parties who are legally entitled to claim them. In my Tax Policy class, I use the example of Manitoba’s Odour-Control Tax Credit: it provides farmers with a credit for purchasing equipment that reduces odour, a negative externality that results from farming activity. But vendors of odour-control equipment might respond to this tax credit by increasing their prices, since they know farmers will be refunded part of the equipment cost by the government of Manitoba. We have no way of knowing, without further research, whether farmers or vendors of odour-control equipment benefit from the credit, even though farmers are legally entitled to claim the credit on their tax returns.

Similarly, it is generally assumed that the charitable donation tax credit benefits charities: the tax credit increases the ability of donors to give. Donors know they will receive some proportion of their donation back in the form of a reduced tax liability, and therefore can afford to give more. The federal and provincial governments, through charitable donation tax credits, are underwriting the charitable sector. Through tax dollars foregone by the government, all Canadian taxpayers are increasing the donation power of high-income individuals to charities.

One argument to justify this spending might be that it gives some control over social spending back to individual taxpayers. (The private sector is thought to distribute resources in the economy more efficiently than the government does). It is also an incentive to donate. However, in the US it has been noted that high-income individuals have a tendency to donate their wealth to causes that benefit other privileged individuals: for example, arts and education. High-income individuals also donate less, as a percentage of total income. Query whether, in a system where an incidental purpose of the income tax is to redistribute income, the government should use public funds to underwrite charitable donations that wealthy individuals make to benefit other relatively privileged individuals. Query whether TWU, as a registered charity, should also be exempt from income tax while its donors receive generous tax credits. While the Canadian Department of Finance does not estimate the value of the income tax exemption for registered charities, the revenue forgone in the non-taxation of other non-profit organizations is estimated. I would side with the literature in the US (e.g., Austin Caster, ““Charitable” Discrimination: Why Taxpayers Should Not Have to Fund 501(C)(3) Organizations that Discriminate Against LGBT Employees” (2011) 24 Regent University L Rev 403), that considers the non-taxation of charitable organizations to be an expenditure no different from the non-taxation of other non-profit entities.

TWU’s Registered Charity Status Should Be Revoked

All of this is troubling when considering the debate over whether TWU is entitled to a law school accredited by bar associations across Canada because TWU is a registered charity. It can issue charitable donation receipts that entitle donors to the credits described above. All registered charities have to file Registered Charity Information Returns that are available to view in redacted form on the CRA’s website. In its 2014 fiscal period alone, TWU received $10,0585,806, or 13% of its total revenue, in donations for which a charitable receipt was issued. Donors would likely have received somewhere between 20% and 70% of their donations as a tax subsidy from the public purse. TWU also received $1,054,623 in direct government funding in 2014 alone. These figures are alarming in light of the constant refrain that TWU is a private institution, and therefore exempt from the application of the Charter (See Trinity Western University v British Columbia College of Teachers, 2001 SCC 31 [TWU v BCCT]). Canadian taxpayers do underwrite a portion of TWU’s budget.

The Canadian public should not be compelled to assist an institution that espouses values that are harmful to gay and lesbian individuals, and that excludes gay and lesbian individuals from employment and education. Note that I refer throughout to gay and lesbian rather than LGBT individuals, unless quoting another source. This is deliberate: to my knowledge no one has yet analyzed the impact of TWU’s Community Covenant on bisexual and trans individuals. The NS Barristers’ Society case uses “LGB” and “LGBT” interchangeably, sometimes within the same paragraph.

There has been a great deal of news coverage lately on the CRA’s audits of other registered charities. Allegations have been made that the CRA is targeting environmental and left-leaning charities, although without a full list of charities under audit (which the CRA cannot make public), it is impossible at this point to prove with 100% certainty that the CRA’s audit choices are a result of political interference. However, the Broadbent Institute has already come forward with a report entitled, “Stephen Harper’s CRA: Selective Audits, “Political” Activity, and Right-Leaning Charities.” No right-leaning charity has come forward to say that it is also under audit, and that alone is considered suspect. Also suspect is that some right-leaning think tanks, namely the C.D. Howe Institute and the Macdonald-Laurier Institute, claim that 0% of their spending is on political activity. These two charities have stated they are not under audit.

In order to obtain registered charity status, a charity must define its purpose as entirely within charitable purpose categories that have been defined over hundreds of years of jurisprudence. The four categories are relief of poverty, advancement of education, advancement of religion, and other purposes beneficial to the community. Canada takes its precedent on the “four heads” of charity from the UK case, Commissioners for Special Purposes of Income Tax v Pemsel, [1891] AC 531. TWU’s mandate, as written, is within the education and religion categories. However, there are further obligations to maintain registered charity status. A charity has very limited scope to engage in non-partisan political activity that is ancillary and incidental to its charitable purposes. Substantially all of a charity’s activities must be charitable (“substantially all” is interpreted by the CRA to mean 90% or more), and its activities must be legal and cannot be contrary to public policy. (See, e.g., Everywoman’s Health Centre Society (1988) v Canada, [1991] FCJ 1162 (FCA) [Everywoman’s Health Centre Society]).

Reforms to Canada’s Income Tax Act in 1986 have been understood as incorporating the CRA’s interpretation of “substantially all” activities as 90% of activities into the legislation. The reforms followed, and appeared to codify, a restrictive approach to whether political activity was “incidental”, taken by the Federal Court of Appeal in upholding the revocation of Scarborough Legal Services’ registered charity status (Samuel Singer, Reforming the Advocacy Rules in Canadian Charity Law: Legislative Amendments, Judicial Action or Administrative Discretion? (LLM Thesis, McGill University Faculty of Law, 2011) [Singer] and Re Scarborough Community Legal Services and the Queen, [1985] 2 FC 555). Courts have been known to reject a strict application of the 90% rule in other areas where “substantially all” appears in the Income Tax Act; however, in this instance the incorporation of that test by Parliament appears deliberate. Therefore, it might be difficult to argue that TWU’s legal fees and other expenditures to uphold the legality of a discriminatory policy cause it to fail the “substantially all” test if they represent less than 10% of TWU’s expenditures.

The Income Tax Act deems an expenditure on political activities to be non-charitable (ss. 149.1(1.1)). A charitable foundation will be considered to be constituted for charitable purposes to the extent of resources devoted to political activities where the charity devotes substantially all of its resources to charitable purposes and the political activities are ancillary and incidental to its charitable purposes (ss. 149.1(6.1); the provision for a “charitable organization” is similar, ss. 149.1(6.2). These are the provisions introduced in the 1986 reforms). There is much debate in the charity law literature over whether the “ancillary and incidental” test has superseded the “substantially all”/90% test in charity law jurisprudence. (For a summary and discussion see Singer, supra). Can it be said that TWU’s activities to defend its right to exclude gay and lesbian students are “ancillary and incidental” to its charitable purposes, when these activities are what TWU is currently best-known for in the media, in Canada and even in the US?

TWU’s Political Activities

TWU is now devoting resources to appealing several law societies’ refusals to accredit TWU’s proposed law school. Arguably, such resources are being spent to defend and not promote TWU’s discriminatory Community Covenant. The funds are being spent to ensure, from TWU’s perspective, that the legal precedent set by the Supreme Court of Canada in TWU v BCCT is applied consistently to allow its request for accreditation of its law school. The CRA’s interpretation of the jurisprudence on political activity is that it includes work to “retain” an existing law, policy, or government decision. The Nova Scotia Supreme Court decision on TWU’s law school accreditation, NS Barristers’ Society, appears to go beyond retaining existing law: it expands freedom of religion to include religious freedom to discriminate. The lopsided nature of the NS Barristers’ Society decision has also been pointed out elsewhere. Meanwhile, TWU claims it spends 0% of its budget on political activities, and therefore does not complete Schedule 7: Political Activities, when filing its Registered Charity Information Return. TWU advocates for the religious right to exclude gay and lesbian individuals, but in answer to the Information Return’s question, “Did the charity carry on any political activities during the fiscal period”? TWU has answered: “No”.

TWU’s Registered Charity Information Return does tell us that TWU carried on fundraising activities in its 2014 fiscal period, including, among other activities, “Advertisements / print / radio / TV commercials”, “Internet”, “Mail campaigns”, “Targeted contacts”, “Telephone / TV solicitations”, and, most alarming of all these, “Cause-related marketing”. What causes, exactly, was TWU marketing to solicit donations? What was the content of the solicitations TWU disseminated through such varied means? Were all these solicitations in furtherance of “Cause-related marketing”? Were those causes related to TWU’s agenda to create the first explicitly, outspokenly straights-only law school in Canada? If so, those solicitations should be categorized as political activities for the purposes of charity and tax law, since TWU is pursuing its agenda through the courts while receiving funding from Canada’s public coffers.

Something urgent and compelling must have solicited extraordinary donations to TWU in its 2014 fiscal period (the most recent period for which information is available). Of the four fiscal periods on the CRA website that list receipted charitable donations as a percentage of TWU’s total revenue, the 2014 fiscal period has significantly higher receipted donations both in absolute terms, and as a percentage of TWU’s total revenue. In absolute terms, the receipted donations in the 2014 fiscal period ($10,585,806) are almost twice the total receipted donations in the 2013 fiscal period ($5,498,766).

Why is taxpayer money funding charitable donation tax credits to TWU’s donors, who almost doubled their donations to TWU in the 2014 fiscal period? Should the $1,983,418 that TWU reports it spent on “Fundraising” in the 2014 period be properly characterized as expenses related to political activities? The only way for these questions to be answered for the taxpaying public is for the Canada Revenue Agency to audit TWU, and for TWU to agree to make public the results of that audit.

Revocation of TWU’s Registered Charity Status on Public Policy Grounds

Even if we accept that TWU’s charitable status cannot be revoked for engaging in political activities, it can still be found to be engaging in activities contrary to public policy. The prohibition on registered charities pursuing activities contrary to public policy has long been established in UK case law, and incorporated into Canadian law. (See e.g. National Anti-Vivisection Society v Inland Revenue Commissioners, [1948] AC 31 (HL) and Everywoman’s Health Centre Society, supra).

In Everywoman’s Health Centre Society, the charity appealing to keep its registered charity status was a free-standing abortion clinic. The Minister of National Revenue argued that charitable status should be revoked for lack of a public policy in favour of abortion, and lack of public consensus on whether providing abortions was a benefit to the public. The Minister argued,

in the absence of clear statements of public policy on the issue of abortion, the Society’s activities cannot be said to accord with public policy: the failure of Parliament to replace the provisions of the Criminal Code that were struck down in the Morgentaler decision, leads the respondent to submit that “it cannot be concluded that first trimester abortion by choice of the patient, while clearly legal, reflects public policy on abortion” (at para 14).

The court found that Parliament’s failure to replace the provisions on abortion struck down in R. v. Morgentaler, [1988] 1 SCR 30, could not constitute a policy. If anything, failure to repeal or replace those provisions constituted an absence of policy. Where there is no public policy for a charity to contravene, its charitable status cannot be revoked on public policy grounds:

It is one thing to act in a way which offends public policy; it is a totally different thing to act in a way which is not reflected in any, adverse or favourable, public policy. An activity simply cannot be held to be contrary to public policy where, admittedly, no such policy exists. (Everywoman’s Health Centre Society at para 15).

TWU’s activities, by contrast, contravene public policy both as embodied in the Charter and in provincial human rights legislation that protects gay and lesbian individuals from discrimination. It is true that in TWU v BCCT, the Supreme Court noted that the Charter could not apply to TWU, and that TWU was exempt from parts of BC human rights legislation (TWU v BCCT, at para 25). However, the existence of the Charter is not a mere failure to express a government policy, as was the case for the Criminal Code provisions referenced in Everywoman’s Health Centre Society. Rather, the Charter enshrines some of our most important public values in the Constitution itself. There is an explicit public policy prohibiting discrimination, both in the Charter and in human rights legislation. That policy exists despite the fact the Charter and some parts of BC human rights were found not to apply to TWU in TWU v BCCT.

An Open Letter to the Canada Revenue Agency: Audit TWU

In Canada we are waiting to find out whether TWU has the right to accreditation for its law school despite policies that discriminate against both students and employees who are gay or lesbian. In NS Barristers’ Society, TWU won an appeal of the Nova Scotia Barristers’ Society’s rejection of TWU’s accreditation application (or, more accurately, the Nova Scotia Barristers’ Society’s agreement to accreditation only if TWU’s Community Covenant was amended).

In the meantime, consider this post an open letter to the CRA. The public deserves an inquiry into how TWU is spending taxpayer money to advocate in the media, before law societies, and now in the courts, the position that it is acceptable – in fact, essential to freedom of religion – to discriminate against gay and lesbian students and staff. These activities are contrary to public policy; therefore, TWU’s charitable status should be revoked. Then the taxpaying public will no longer be compelled to fund an institution that is hostile to gay and lesbian equality.

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About Saul Templeton

B.A. (York), J.D. (Osgoode), L.L.M. (Osgoode). Assistant Professor. Please click here for more information.
This entry was posted in Ethics and the Legal Profession, Human Rights, Tax. Bookmark the permalink.

11 Responses to Trinity Western University: Your Tax Dollars at Work

  1. Roland and Valerie Priddle says:

    Re: TWU Your Tax Dollars at Work
    Nice to see that someone has come across the concept of Tax Expenditures.
    They seem to run several billion dollars annually at the federal level. See for example
    Are you suggesting that someone (who?) should search through all those who benefit from tax expenditures and weed out ones that are contrary to “public policy”?
    How does one define “public policy” in the particular context of TWU?
    Is it a term of art used in the Income Tax Act and relevant Regulations?

  2. Russell says:

    The underlying substantive issue raised by TWU’s proposed law school, as described by Professor Woolley in a previous Ablawg post (available at is this: “the proper resolution of an irreducible conflict between equality rights and freedom of religion”. Professor Woolley expands in her article “Equality Rights, Freedom of Religion and the Training of Canadian Lawyers” (2014) 17 Legal Ethics (available at

    “Over the past decade the legal system has clearly recognized the equality rights of LGBTQ Canadians. But the Canadian constitution also protects freedom of religion.

    Ultimately there is no response to TWU that ensures robust treatment of freedom of religion and of equality rights. Either the freedom or the right must be compromised.

    From my own perspective the proposed TWU law school defies satisfactory resolution. I reject the perspective that religious belief obviously justifies this sort of discriminatory practice. At the same time, constraining expressions of human sexuality to monogamous heterosexual marriage is a mainstream religious belief. I see some weight to the argument that freedom of religion protects even bad religious practices. If forced to choose I would pick equality over religious freedom, but in doing so I would recognize the sacrifice of the freedom at the right’s expense, and would feel the weight of that loss.”

    I respect Professor Woolley’s choice. I would chose differently. I suspect most people would chose based on their a priori convictions.

    While you acknowledge that “advancement of religion” is an established charitable purpose category, you suggest that the “freedom of religion” cannot be “expanded” to “include religious freedom to discriminate”. You further state that “[t]he Canadian public should not be compelled to assist an institution that espouses values that are harmful to gay and lesbian individuals … “.

    I have two general comments to make.

    The first is that, with respect, the underlying “irreducible conflict” pointed to by Professor Woolley has been obscured or ignored. (Though, perhaps that comment is unfair, given the scope of the article).

    The second is that, if the view you support is accepted, I query how a principled line could be drawn short of revoking the charitable status of every religious institution in Canada that espouses “containing expressions of human sexuality to monogamous heterosexual marriage” (which, as acknowledged by Professor Woolley, is a mainstream religious practice). The logical conclusion of your line of thought that Canadians “should not be compelled to assist an institution that espouses values that are harmful to gay and lesbian individuals” seems inevitably to lead to that result. In effect, not only should the irreducible conflict between equality rights and freedom of religion be resolved in favor of equality rights, any charitable institution that would suggest otherwise ought to be punished – and that is in substance what it is – by losing its charitable status. With respect, such a result is self-evidently unfair.

  3. Saul Templeton says:

    Hi Roland and Valerie,

    Thanks, yes the tax expenditure budget you’ve linked to is an annual publication by the Department of Finance. Thus tax expenditures are tracked as spending by the federal government and the estimated value of that spending is made available to the public (subject to some caveats about Finance’s methodology in estimating the lost revenue represented by each expenditure).

    The question of who should review tax expenditures in Canada is an interesting one. I suppose I could suggest that the federal government strike a Royal Commission to review them and make recommendations about which ones to keep or scrap going forward. Academics do comment extensively on tax expenditures with some regularity, for example there is the excellent 2011 text edited by Lisa Philipps, Neil Brooks and Jinyan Li, Tax Expenditures: State of the Art. See

    If I am understanding your comment correctly though, you are asking whose responsibility it is to ensure that beneficiaries of tax expenditures are legally entitled to them? The answer is the Minister of National Revenue, through the Canada Revenue Agency. The CRA is responsible for administering and enforcing most tax laws in Canada.

    The legal point about public policy applies specifically in the context of charity law, so unfortunately it cannot be used as a legal argument to invalidate other tax expenditures. The Canada Revenue Agency can audit specific charities and revoke their charitable status on the basis that the charity is pursuing activities that are contrary to public policy, and appeals of the CRA’s decisions in those cases end up in the courts. (See the discussion in my post of Everywoman’s Health Centre Society (1988) v Canada, [1991] FCJ 1162 (FCA)). What constitutes a contravention of public policy sufficient to revoke charitable status is thus a definitional problem that it is up to our judiciary to resolve as similar cases go to court. So, yes, “public policy” is a term of art here but it is not defined in the Income Tax Act or its Regulations. The concept has developed through hundreds of years of charity law both in Canada, and in old UK jurisprudence we have incorporated into our own body of charity law jurisprudence. (Canada incorporated the rule that charities cannot pursue activities contrary to public policy from, e.g., National Anti-Vivisection Society v Inland Revenue Commissioners, [1948] AC 31 (HL)).

    Many thanks for your comments,


  4. Jordan says:

    I agree with Russell’s comments, but will add two more.

    If the argument is to revoke charitable status for organizations which discriminate, why stop at discrimination against LGBT individuals? This argument could be used to support revoking charitable status for all religious charities who selectively hire only those who share their faith, or women’s relief charities who discriminate on the basis of gender, such as the one in Vancouver Rape Relief Society v Nixon.

    Moreover, both the BCCT decision and the NSBS decisions considered the Charter issue, and concluded that TWU was operating consistently with Charter values (See para 25 of the BCCT decision where the SCC stated: “we conclude that a homosexual student would not be tempted to apply for admission, and could only sign the so-called student contract at a considerable personal cost. TWU is not for everybody; it is designed to address the needs of people who share a number of religious convictions. That said, the admissions policy of TWU alone is not in itself sufficient to establish
    discrimination as it is understood in our s. 15 jurisprudence.”). So even if the argument is that because of the public funding via tax exemptions, that the Charter should apply, it is unlikely that this would change the substantive result in either of these decisions.

  5. Saul Templeton says:

    Hi Russell and Jordan,

    Many thanks for your comments. Russell: I will deal with the issues you have raised in a follow-up ABlawg post, forthcoming. So please stay tuned.


    I will deal with the second issue raised first. (It is the simpler to answer). In this post, I deliberately declined to engage the debate about the correct application of the Charter to TWU. I am not a constitutional law scholar, so I have confined my comments to tax and charity law. Charity law is a separate line of jurisprudence. As discussed, it is a very old principle in charity law that an organization cannot be said to be charitable if it engages in activities contrary to public policy. There is no requirement that courts, in assessing charitable status, adhere to the balancing exercises performed by the courts in Charter jurisprudence. I am not persuaded that a court deciding a charity law case would rely on the balancing decisions in TWU v BCCT and NS Barristers’ Society as evidence of a public policy permitting religious organizations to discriminate against gays and lesbians. Determining what activities are contrary to public policy requires a different analysis from the one determining what Charter right takes precedence. However, the Charter is evidence of a public policy against discrimination on the basis of sexual orientation.

    Back to the first issue: I would not find it troubling if the CRA interpreted my arguments in the manner described. Why should a religious organization refuse to hire, e.g., a bookkeeper from a different faith? The result of finding such behaviour contrary to public policy for charity law purposes would only be that other Canadian taxpayers would no longer be forced to subsidize that religious organization through the tax system. I would argue that religious organizations would still be able to “discriminate” in hiring only faith leaders of their same religion, and keep their charitable status. That would not be discrimination on the basis of religion necessarily: a faith leader of a different religion would not be qualified for the job.

    I do think the Vancouver Rape Relief Society should lose its charitable tax status. To deny a trans woman a volunteer position in her own community, solely on the basis of gender, is a prohibited form of discrimination under the relevant human rights legislation. The BC Court of Appeal said as much in Vancouver Rape Relief Society v Nixon, 2005 BCCA 601. It simply found it could not grant Ms. Nixon relief because BC exempts non-profit organizations from the provisions that would otherwise protect her (para. 9). Maybe there would be some justice for Ms. Nixon, and all trans women, if trans people were no longer forced to subsidize the Vancouver Rape Relief Society, and its donors, with their tax dollars. So if anyone in the CRA is reading this, I hope they will also consider this comment an open letter requesting an audit of the Vancouver Rape Relief Society on the basis that it is engaging in activities contrary to public policy.

    Trans women are some of the most vulnerable people in our society, since they exist at the intersection of transphobia and misogyny. In the US, the trans community lost seven trans women to murder in the first seven weeks of 2015 alone. Six of these murdered women were women of colour. (See: The prevalence of violence against trans women, particularly trans women of colour, is heartbreaking. These losses make it particularly sad, and bitterly ironic, that trans women are so often excluded from women’s shelters.

    Personally, I will only donate to women’s shelters that have an explicit policy of welcoming trans women. I have this shelter’s page bookmarked in my laptop’s browser for that reason:

  6. Jordan says:

    Thanks for your reply Saul. I have three follow-up questions:

    First, would the public policy analysis not be at least very similar to that engaged in by the BCCT court, considering that in that case it was not a Charter argument per se, but rather an evaluation of whether the BC College of Teachers properly considered the public interest under s.4 of the Teaching Profession Act? Even if the analysis under charity law was that different (I will defer to your expertise, as I know next to nothing about charity/tax law), would TWU (or any other non-profit organization who prefers members of its own group) not still have an argument that the CRA was bound to consider their Charter rights and freedoms, and thereby engage a Charter analysis in any event?

    Second, while there is no disputing the fact that members of the LGBT community have been the subject of systemic discrimination resulting in significant social and psychological harms, is there a distinction to be made between the harms suffered in 3 different scenarios:
    1) State sanctioned discrimination (i.e. bans on same sex marriage)
    2) State and institutional failure to enact anti-discrimination policies
    3) Limited exemptions to anti-discrimination policies for other minority groups

    Are the harms suffered from the 3rd category sufficient to justify imposing a significant sanction on groups that are otherwise performing valuable community services? I ask, because the only evidence presented against TWU in its current court actions comes from research looking at the first two categories, but it seems as though the 3rd is markedly different.

    Lastly, (admittedly, this is more of a comment than a question) you asked: “Why should a religious organization refuse to hire, e.g., a bookkeeper from a different faith?” The answer is that religious organizations, because of their beliefs, do not see a significant dividing line between “charitable” and “administrative” activities: “So whether you eat or drink or whatever you do, do it all for the glory of God” 1 Corinthians 10:31. For an organization who wants to create a specific culture, if that culture is a religious one, then part of a person’s merit is their faith and adherence to it. So, while you may not see the importance – they do, and that’s what makes them a unique community: and a minority one.

    Thanks again,

  7. Kevin Kindred says:

    Not a regular follower of this blog, I got here because CanLii tweeted this post.

    If having charitable status amounts to being “publicly funded”, by your argument, shouldn’t every church be considered “publicly funded”? And shouldn’t we therefore be able to, say, force the Catholic Church to ordain women priests?

    If enforcing your rights through court challenges amounts to “political activity,” then once an HRC forces the Catholic Church to ordain women priests and they seek judicial review, aren’t they also engaged in political activity?

    To be quite honest, I’m broadly in favour of removing charitable status for most religious institutions. But, isn’t that the implication of your argument, rather than simply the proposal of removing TWU’s charitable status?

  8. Saul Templeton says:

    Hi Jordan and Kevin,

    Thanks for your comments. I will deal with the issues you have raised in order.

    1. With respect, I do not agree that the CRA would be required to consider TWU’s Charter rights in making a decision to revoke TWU’s charitable status. There are a couple of decisions of the Federal Court of Appeal where religious organizations invoked their s. 2(b) Charter right to freedom of expression. Those cases involve religious organizations that lost their charitable tax status for engaging in political activity that was more than ancillary and incidental to their purported charitable purposes. Both were advocating anti-abortion positions. (Interestingly, the religious organizations in these cases claimed they fell under the advancement of education head of charitable purposes, not the religious head of charitable purposes. The “Basic Information Sheet” part of TWU’s Registered Charity Information Return also appears to emphasize its educational purpose over its religious purpose).

    The law in this area was resolved by Justice Strayer in para 18 of Human Life International in Canada Inc. v Canada, [1998] 3 FC 202:

    “With respect to the Charter argument based on alleged infringement of freedom of expression, the basic premise of the appellant is untenable. Essentially its argument is that a denial of tax exemption to those wishing to advocate certain opinions is a denial of freedom of expression on this basis. On this premise it would be equally arguable that anyone who wishes the psychic satisfaction of having his personal views pressed on his fellow citizens is constitutionally entitled to a tax credit for any money he contributes for this purpose. The appellant is in no way restricted by the Income Tax Act from disseminating any views or opinions whatever. The guarantee of freedom of expression in paragraph 2(b) of the Charter is not a guarantee of public funding through tax exemptions for the propagation of opinions no matter how good or how sincerely held. It is possible, of course, that if it could be shown that there was discriminatory treatment in the registration and revocation of registration of organizations in a way which would offend section 15 of the Charter there might be some basis for a constitutional attack. But the appellant does not allege and certainly has not demonstrated any such discrimination in this case.”

    This paragraph was quoted, followed and relied upon to dispose of the same issue in Alliance for Life v Canada, 1999 FCA, [1999]; 3 FC 504. The same logic should apply to a freedom of religion argument: freedom of religion does not require that we publicly fund religious organizations that engage in activities contrary to public policy. Nothing about revoking charitable status curtails freedom of religion.

    2. The “limited exemptions to anti-discrimination policies for other minority groups” does not entitle TWU to public funding, for the reasons explained above. Again, I do not consider it a “sanction” for the government to revoke charitable status. Revocation of charitable status is not a punishment; it just removes the obligation on other taxpayers to fund an institution that does not comply with the criteria for maintaining charitable status.

    3. Jordan: if I understand you correctly, you are suggesting that TWU (or any other religious organization) may see value in discriminating against a bookkeeper of another faith in its hiring process, because it wants to maintain its Christian community. That may be true, but if a charitable organization is discriminating in its hiring policies on religious grounds (where adhering to a particular faith is not a qualification of the job), it runs into the same problem with discriminating against LGBTQI+ students in my answers 1 and 2 above. Discrimination that is contrary to public policy is grounds to revoke charitable status, no matter how sincerely held a religious belief is. Consider another hypothetical: a religious organization decides to discriminate on the basis of race in its hiring process, based on sincerely held religious beliefs. Should it keep its charitable status? We might allow the religious organization to continue to exist, but the rest of the taxpaying public should not be required to fund the organization through the tax system.

    4. Kevin: Yes, every church that has charitable status is publicly funded through the tax system. (There is even a clergy residence deduction in the Income Tax Act that I didn’t get into in this post). I am not aware of a Human Rights Commission proceeding that is attempting to force the Catholic Church to ordain female priests. But let’s assume the Catholic Church was pursuing a right to discriminate against women in hiring faith leaders through the courts: there might indeed be a compelling case to revoke its charitable tax status. If I were representing the Catholic Church in appealing such a decision, I would argue that adhering to (and sincerely sharing) the beliefs of the Catholic Church is a requirement for priesthood. A woman seeking priesthood would not share the beliefs of the Catholic Church and therefore would not be qualified for the job, regardless of her gender. Personally, I find that argument repugnant, but it would be up to the courts to decide.

  9. Jordan says:

    Hi Saul, thanks for your insights on this, I have just a few more persistent doubts however.

    First, in terms of the claim that TWU’s Charter rights would not be considered. This sounds dubious and troubling. The free speech precedents you cited seem both readily distinguishable and outdated. They are distinguishable in the sense that most political activity will be speech or expression oriented. If free speech was allowed to be a shield against the limitation on political activities for charities, it would render that limitation meaningless. On the other hand, it seems axiomatic that religious organizations will prefer adherents to their own faith – barring them this ability would render the “advancement of religion” category for charities meaningless. It will be meaningless because you will have stripped it of its content at precisely a point where its distinctiveness is at stake.
    Those precedents further seem outdated by the Dore decision, which it seems to me would bind the CRA to consider not only the s.2(a) liberty acknowledged by the Charter, but also their s.15 rights as well.

    Secondly, it does seem likely that a “Charter like” analysis would be inevitable in considering what the public interest is. As the Supreme Court stated in BCCT “While the BCCT was not directly applying either the Charter or the province’s human rights
    legislation when making its decision, it was entitled to look to these instruments to
    determine whether it would be in the public interest to allow public school teachers to be trained at TWU.” (para 27). While the court there uses the word “entitled”, the very next paragraph it states “At the same time, however, the BCCT is also required to consider issues of religious freedom”.
    This being the case, it seems as though establishing that TWU’s admissions policies are contrary to public policy would be more difficult than you have suggested – especially given the findings of the court in BCCT (at para 25), and the fact that s.41 of the BC Human Rights Act authorizes TWU to function in that manner. Those two findings, it seems to me, would speak strongly toward a consideration of what is or would be contrary to public policy.

    That being said, I am not opposed to a finding that it would be contrary to public policy, but it should be done in a way that doesn’t nullify the category of “advancement of religion”. For me then, it seems that the only way to do this would be to couch the argument in harms done to the LGBT community. This is what NSBS attempted to do, but simply failed to demonstrate how their action would ameliorate harm [para 254] – consideration of this issue may well be different for the CRA, but it has yet to be demonstrated to me that this is so.

    To do otherwise it seems, is to attempt to justify the distinction on the basis of a statement of principle, which would violate state neutrality and be an absurd concept, since public opinion is a fickle entity to ground a decision in. Justice Campbell pointed this out in the NSBS decision at para 16: “The NSBS regulation and policy are in effect a statement of principle to stand in solidarity with LGBT people. …That statement has no connection to the equality rights of the LGBT community or the public interest in the practice of law in Nova Scotia. That’s less a statement about equality than a statement about the futility of just making statements.” Think about it in another way, if Evangelical Christian groups came out saying they didn’t want their tax dollars to fund LGBT charities. It would be ridiculous for state actors to deny funding in the form of tax exemptions to groups which portions of the population didn’t agree with, on that ground alone.

    You stated that the removal of tax exempt status was not a sanction, but that seems like a hard position to justify, when you are denying a benefit that would otherwise be available to them, but for their religious beliefs. As Professor Gedicks has pointed out “In a society that eschews invidious discrimination, however, that values equality of persons, organizations, and ideas, there is no easy justification for denying persons and organizations the considerable benefits of the social welfare state simply because they hold religious beliefs or observe religious practices”.

    Lastly, on your post regarding TWU’s admission policies and their effects on the transgendered community, it sounds like you have put much more thought into it than they probably have – I would be willing to do a joint submission with you directly to TWU to engage them in a dialogue about that issue. It seems to me like that would be the best way to enact change in these policies, rather than jumping straight to an adversarial process.

    Thanks again,

  10. Saul Templeton says:

    Hi Jordan,

    Thanks again for your comments. And thank you for your offer to work on submissions to TWU to engage its administration in a discussion about trans inclusivity. Unfortunately, I do not think accepting trans students would help TWU: it would just create more irresolvable contradictions in attempting to enforce the Covenant. You may have seen already that I’ve made a separate post about trans issues and the Covenant here:

    With respect to religious organizations who refuse to hire, e.g., bookkeepers, or even custodial staff, of other faiths: to me that is a case of prima facie discrimination on the basis of religious affiliation. I might concede that for some reason religious organizations should be allowed to discriminate against people of other faiths in hiring bookkeepers and custodial staff, and keep their charitable status. (Maybe there is something special about religious organizations discriminating against other religious organizations’ adherents?) I do not concede that point because discrimination on protected grounds is prima facie contrary to public policy, and is therefore grounds to revoke charitable status. Having a charitable purpose is a necessary but not a sufficient condition for maintaining charitable status. (Therefore the head of advancement of religion would not be nullified, as suggested, if TWU loses its charitable status for failing to meet other necessary conditions for charitable status).

    Even if I did concede this point, it would not help TWU defend its charitable status. TWU is discriminating against members of its own faith who are gay and lesbian. (And trans and intersex as I’ve argued in subsequent posts). Simple math demonstrates that there will be Evangelical Christians who are born intersex, and others who will be gay, lesbian and trans. This is the case even if the religious community denies the existence of these sexual minorities. TWU has tried to write sexual orientation down to choice, but it cannot write the intersex differences of its own community members down to choice.

    The example of revoking the charitable status of LGBT groups is not analogous to revoking TWU’s charitable status. I know of no LGBT group that would exclude people because they are Evangelical Christians, or members of any other religion. Off the top of my head, I can think of several Evangelical Christians in my acquaintance who either identify as LGBT, or are strong allies and support LGBT rights on principle, even if they believe (mostly privately) that homosexual sex acts are sinful. These individuals would be welcome in any LGBT group that is inclusive of allies, so I cannot think of a public policy that LGBT groups would be violating in a manner analogous to TWU’s blanket exclusion of married gay and lesbian individuals from education and employment.

    If an LGBT group were discriminating in its employment policies against a group of people solely on the basis of their religious beliefs, I would say: absolutely, the CRA should be directed to audit that LGBT group as well, if it had charitable status. (Many LGBT organizations and fundraisers do not have charitable tax status, either because they are openly political – and therefore would not qualify for charitable tax status – or they are too small to jump through the administrative hoops of applying for charitable tax status). This would not be an arbitrary exercise of state power; it would be a legitimate administration and enforcement action by the CRA, as would be an audit of TWU. LGBT charities are no more entitled to public funding than religious organizations are, if they violate necessary conditions of maintaining charitable status the way TWU does by discriminating against minorities.

    And what if we do think it is OK for religious organizations to discriminate on the basis of freedom of religion, without being in violation of public policy? How far does that right go, while we still allow access to the public purse? As I asked in an earlier comment, can religious organizations discriminate in hiring policies on the basis of race, and keep their charitable status? What about on the basis of disability? It would be possible that such positions could be justified based on biblical commands to commit genocide, and on descriptions of persons with disabilities as having been afflicted by the Lord for being unfaithful, and as being unclean and banned from the temple. (Just some examples can be found in 1 Samuel 15:3; and 2 Chron: 16-23). I don’t know of any religious organization that interprets these passages as justifying these kinds of discrimination in 2015, but it would be possible to use sincere adherence to those and other passages to justify discrimination on the basis of race and disability.

    In my view, the only thing that allowed the Supreme Court of Canada and the Nova Scotia Supreme Court to permit TWU to discriminate against gays and lesbians is that they took the erroneous view that gays and lesbians could simply choose other schools. But as I’ve argued in subsequent posts, some LGBTQI+ people may have an intersex difference that they discover while they are at TWU. Similarly, a student could discover a different racial ancestry while at a religious institution, or discover or acquire a disability while at a religious institution. Even gays and lesbians might have so much internalized shame as a result of systemic homophobia that they might not be able to admit to themselves they are gay and lesbian until partway through a degree. Should it be permissible for a religious organization to expel all those groups of people? Or even to turn them away in the admissions process if their intersex difference, racial ancestry or disability status is already apparent? Maybe freedom of religion has a balancing role in allowing the organization to exist, but certainly we should not continue to provide generous tax subsidies to charitable organizations that do not prove a benefit to the entire community, and in fact harm some community members on Charter-protected grounds. Such actions are clearly contrary to public policy, and disqualify an organization from claiming charitable tax status with no corresponding infringement of the religious freedom to continue with faith-based discrimination.

    With respect, the statement that the removal of charitable tax status is a sanction because it “denies a benefit that would otherwise be available to [TWU], but for their religious beliefs” fundamentally misunderstands the tax expenditure concept. TWU would not be denied a benefit it is entitled to, because it is not entitled to taxpayer funding. It must meet the criteria to receive public funding, just like any other recipient of tax benefits or even of welfare benefits. Revoking TWU’s charitable status has nothing to do with impugning the beliefs of community members, which is what that Gedicks quote refers to. As I’ve said before, revocation of charitable status simply removes the obligation on the rest of us to publicly fund an institution that is pursuing activities contrary to public policy, and therefore violating a necessary condition for charitable tax status. The important term here is “pursuing activities”, not “holding beliefs” contrary to public policy.

    Asking whether TWU should have access to the public purse is a very different question from whether it should be permitted to exist as an institution that offers courses to students who share its beliefs, and whether those students should have professional accreditation. The former implies that TWU might have a positive right to require financial support from all Canadian taxpayers; the latter has been framed in the NSBS decision as a matter of whether the Nova Scotia Barristers’ Society can prevent TWU grads from being called to the Nova Scotia bar. So even if some Charter balancing did apply (and I do not agree that it does because there is no infringement of freedom of religion in denying charitable status to an institution that does not meet the criteria for charitable tax status) it would be a different balancing test from the one engaged in NSBS. The case for TWU would be weaker, if not entirely non-existent, because it would be using freedom of religion to impose positive financial obligations on other taxpayers, instead of just making the case for its own existence and ability to produce graduates who could be accredited professionals.

    Furthermore, as is explained in my subsequent two posts on TWU, it is my position that the Charter analysis in the NSBS decision is deficient, even as it applies to the distinct question of whether the Nova Scotia Barristers’ Society can and should prevent TWU law grads from getting accreditation in Nova Scotia. The Nova Scotia Supreme Court failed to account for the impact of TWU’s Covenant on trans and intersex individuals – people who, like gays and lesbians, are born into the Evangelical Christian community, and may currently be working at and attending TWU, but have no choice but to live and marry outside the gender binary.

    Those subsequent posts are here:

    And here:

  11. Anonamouse says:

    Non-lawyer here.

    Reading the objections it seems that much of the argument follows some reasoning along the lines of “yes, but if we acknowledge this egregious form of discrimination, one which clearly contravenes public policy and has implications for taxable status, then we will necessarily have to acknowledge others….that would have far reaching and overarching implications for tax exempt organizations”

    To which I respond with an exuberant, yes!

    I think Saul says it perfectly:
    “I might concede that for some reason religious organizations should be allowed to discriminate against people of other faiths in hiring bookkeepers and custodial staff, and keep their charitable status. (Maybe there is something special about religious organizations discriminating against other religious organizations’ adherents?) I do not concede that point because discrimination on protected grounds is prima facie contrary to public policy, and is therefore grounds to revoke charitable status. Having a charitable purpose is a necessary but not a sufficient condition for maintaining charitable status.”

    The issue is tax exempt status, not freedom of expression. Such misguided conduct on the part of TWU should exclude them from access to limited public resources. Such policies and practices should not be validated with tax dollars. Not only are we legitimizing these institutions, but these tax concessions carry with them significant costs-as Saul points out- in the form of tax expenditures that diminish public accounts, and as such necessitate the raising of additional revenues, whether that be in the form of higher tax rates or a broadened base. In a very real sense this means we are all subsidizing this nonsense, and thus complicit in these shameful displays.

    If these organizations insist on clinging to such hateful ignorance can we not at least agree that they need not be subsidized at the direct expense of healthcare, education and other deserving avenues?

    Sorry, if I have trammeled on the more nuanced legal discussion that was taking place. For me this is an issue of public finance and social moires. Perhaps on that plane we might more readily find a consensus.

    PS. Saul, excellent work, truly.

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