OTTAWA – An international Muslim aid charity is telling Canada’s Supreme Court that the federal government should not be allowed to “shoot first and hold a hearing later” when it comes to imposing administrative sanctions.
Ottawa-based Human Concern International is asking the high court to review the Federal Appeals Court’s refusal to freeze a government-imposed stay, which barred the charity from issuing tax receipts, while the penalty is being challenged.
The Canada Revenue Agency imposed the one-year suspension in July 2021 following an audit by the revenue agency’s charities directorate that flagged concerns about six initiatives.
The suspension has now expired, but HCI is still taking the matter to court, saying it has significant repercussions for the charity sector as a whole.
In its request for a Supreme Court hearing, HCI says the rule of law in Canada will be “significantly diminished” if the court does not intervene.
The charity argues that federal agencies will be empowered to impose sanctions before issues are aired, and before a finding of guilt.
“Justice will be denied to innocent parties, as government agencies will be free to impose punishments on citizens, even when the punishment cannot be reversed in the event that a bureaucratic error is identified in the trial.”
Any other charity that goes through a revenue agency audit “will live with this fear of suspension,” HCI chief executive Mahmuda Khan said in an interview. “And they will also think, OK, we have nowhere to go, or there is no way to hold the CRA accountable. And that’s not the position we want to have for charities in Canada.”
The revenue agency accused HCI of improperly issuing donation receipts totaling more than $307,000 on behalf of the organizations that manage the six projects in question, a practice known as third-party receipts.
Initiatives included three education and health projects in India, orphan education and skills development in Bangladesh, orphan support in Somalia, and an education project in Kenya.
HCI, Canada’s oldest Muslim global relief charity, says the charities often work with people and groups connected to the communities where the projects take place.
The charity insists that it has always been committed to maintaining direction and control of its overseas projects and ensuring that all such projects carried out through external intermediaries constitute HCI’s own charitable activities.
HCI contested the suspension through the revenue agency’s internal administrative appeal process. That appeal is ongoing, Khan said.
At the same time, it requested the Federal Tax Court to delay the application of the suspension until the tax agency had considered the objection.
In August 2021, a Tax Court judge refused to grant a stay of suspension.
In a decision earlier this year, a three-member panel of the Federal Court of Appeals upheld the judge’s decision, saying that HCI had raised no error that warranted intervention.
The Court of Appeal also said that HCI’s argument that the Tax Court should have applied principles of natural justice to ensure that the charity was not deprived of its right to a hearing on the merits before imposed the suspension was unfounded.
In its application to the Supreme Court, HCI says it lost approximately $4 million in donations as a result of the suspension.
The charity has also incurred “significant legal fees”, Khan said.
HCI says that while the revenue agency plays an important public role in regulating the special status of charities, the public interest can still be served by imposing a stay once internal appeals at the agency have been exhausted. .
Federal attorneys have yet to present arguments in response. The Supreme Court is expected to decide in the coming weeks whether to hear the case.
In a statement Thursday marking the end of the one-year suspension, HCI said tax receipts will be issued for all eligible donations going forward.
“HCI appreciates that many of our donors supported us during these difficult times while the CRA’s one-year suspension was in effect. Supporting our humanitarian programs despite our inability to issue tax receipts is evidence of HCI’s 40-year achievement in continuing our relationship with our donors and recipients,” the statement said.
“HCI worked tirelessly to minimize the impact of the suspension on our grantees, including supporting tens of thousands of orphans, empowering vulnerable women, providing water, rebuilding Gaza, and responding to emergencies in Afghanistan and Yemen.” .