Statute of Charitable Uses – A 17th Century Framework in the 21st Century

January 9, 2012 Hull & Hull LLP Charities, Estate & Trust Tags: , , 0 Comments

"Relief of the aged, impotent, and poor people; maintenance of sick and maimed soldiers and mariners, schools of learning, free schools, and scholars in universities, repair of bridges, ports, havens, causeways, churches, seabanks, and highways, education and preferment of orphans, for or towards relief of stock, or maintenance for houses of correction, marriages of poor maids, supportation, aid, and help of young tradesmen, handicraftsmen, and persons decayed, relief or redemption of prisoners or captives, aide or ease of any poor inhabitants concerning payments of fifteens, setting out soldiers of soldiers and other taxes."

The above is the preamble to the Statute of Charitable Uses, passed by Queen Elizabeth I in 1601. Although more than 400 years have passed since the statute came into force, to this day these words play an important role in what organizations may receive the benefit of being officially registered as charities under the Income Tax Act.

In Commissioners for Special Purposes of the Income Tax v. Pemsel, [1891] A.C. 531 (H.L.). ("Pemsel") the Statute of Charitable Uses was broken down into four headings under which a charitable purpose must fall. They are: (1) the relief of poverty; (2) the advancement of education; (3) the advancement of religion; and (4) certain other purposes beneficial to the community. If a charity’s "purpose" does not fall within one of these four headings, the charity cannot receive the benefit (i.e. tax free status and ability to give tax receipts) of being officially registered as a charity under the Income Tax Act.

The courts in Canada have strictly adhered to the charitable purpose headings contained in Pemsel (and by implication the preamble to the Statute of Charitable Uses written in 1601). In A.Y.S.A. Amateur Youth Soccer Association v. Canada (Revenue Agency) ("A.Y.S.A."), a 2007 decision of the SCC, a youth soccer association applied to the Canada Revenue Agency to become a registered charity pursuant to the Income Tax Act. The CRA refused to register the soccer association, and the soccer association appealed its ruling. In the end the SCC agreed with the Canada Revenue Agency, and refused to allow the soccer association to be registered as a charity.

In A.Y.S.A. the soccer association argued that its purpose was charitable as it fell under the fourth heading "certain other purposes beneficial to the community", arguing that the promotion of sport and physical fitness amongst youth was for the public benefit. The court rejected this argument, focusing on the fact that the soccer association had as its main purpose in its letters patent the "promotion of soccer" and to "increase participation in sport", goals that the court says are not charitable. In a way, because sport was not seen as "charitable" in 1601, the SCC could not accept it as "charitable" today.

I would like to think that in the 21st Century an organization that promotes health and physical activity amongst children would be considered "beneficial to the community". There is certainly no lack of information out there about the growing obesity rates amongst children, and the impact that it is having on their overall health. Perhaps it is finally time that we move away from our 17th Century definition of what a charity can be, and allow for a definition that is more in tune with life in the 21st Century.

Ian Hull – Click here for more information on Ian Hull

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