Link: Case Summary Document
Citation:  FCA 146
Acknowledgement:The Pemsel Case Foundation thanks The Australian Centre for Philanthropy and Nonprofit Studies for its contribution in the drafting of this Case Note.
Review of a Ministerial Determination of tax status of the Foundation funding infrastructure of amateur sporting clubs.
1. This is an appeal court decision delivered by Webb JA, with Rennie JA and Leblanc JA concurring. The appeal was heard at the same time as Athletes 4 Athletes Foundation v. Canada (National Revenue) 2021 FCA 145 which involved similar issues. The decisions for each were delivered by the Court on the same day.
2. Tomorrow’s Champions Foundation (TCF) is a society incorporated under the Societies Act, SBC 2015, c 18 which has an office in Vancouver. The constitutional purposes of TCF were expressed as:
The purposes of the Society are:
a) to develop, fund, promote and carry on activities, programs and facilities for the promotion of amateur athletics in Canada on a nation-wide basis as its exclusive purpose and exclusive function;
b) to solicit and receive gifts, bequests, trusts, funds and property and beneficially, or as a trustee or agent, to hold, invest, develop, manage, accumulate and administer funds and property for the purposes of the Society;
c) to disburse funds and property to, and for the benefit of associations, clubs and societies the primary purpose and primary function of which is the promotion of amateur athletics in Canada and for and to such other purposes and activities as are authorized for registered Canadian amateur athletic associations under the Income Tax Act;
d) to perform other functions as are ancillary and incidental to the attainment of the purposes and the exercise of the powers of the Society.
3. The business model of TCF is to provide funding for infrastructure that will lower the barriers to entry and increase access to athletics for Canadian youth. Support is for facilities (i.e. paying for field time or paying for field improvements and maintenance), equipment (purchasing equipment to be loaned out) and services (paying a professional athlete, sport psychologist or trainer to provide advice and guidance to athletes and coaches).
4. TCF applied for registration as a registered Canadian amateur athletic association (RCAAA) under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (the Act). A RCAAA is defined in subsection 248(1) of the Act as a CAAA which satisfies the definition as set out in subsection 149.1(1) of the Act and which has applied for and is registered as an RCAAA:
…registered Canadian amateur athletic association means a Canadian amateur athletic association within the meaning assigned by subsection 149.1(1) that has applied to the Minister in prescribed form for registration, that has been registered and whose registration has not been revoked;
5. The definition of CAAA is as follows:
Canadian amateur athletic association means an association that
(a) was created under any law in force in Canada,
(b) is resident in Canada,
(c) has no part of its income payable to, or otherwise available for the personal benefit of, any proprietor, member or shareholder of the association unless the proprietor, member or shareholder was a club, society or association the primary purpose and primary function of which was the promotion of amateur athletics in Canada,
(d) has the promotion of amateur athletics in Canada on a nationwide basis as its exclusive purpose and exclusive function, and
(e) devotes all its resources to that purpose and function;
6. TCF applied for registration as an RCAAA to the Canada Revenue Agency (CRA). This application was denied and the Minister issued a Notice of Refusal of Registration (the Notice) that TCF’s activities “are not analogous to the exclusive purposes and functions of a CAAA that can qualify for registered status” (at ).
7. TCF’s appeal to the Court was on the basis that the Minister erred in denying its application because of (at ):
(a) fettering her discretion with respect to eligibility for registration as an RCAAA;
(b) incorrectly interpreting the terms “exclusive” , “nationwide” and “amateur athletics” in paragraph
(d) of the definition of CAAA in s. 149.1(1) of the ITA; and
(c) taking into account an irrelevant consideration.
8. As there were extricable questions of law with respect to the proper interpretation of the definition of CAAA, the standard of review was correctness.
9. TCF adopted and relied on the submissions made in Athletes 4 Athletes Foundation v. Canada (National Revenue) 2021 FCA 145 (A4A) heard at the same time, with respect to the interpretation of the definition of a CAAA in the Act. The Court noted “that the findings with respect to the interpretation of the definition of a CAAA, as set out in the reasons provided in the appeal of A4A are equally applicable here and there is no need to repeat them” (at ).
10. There were additional arguments to those raised in A4A that were considered by the Court being that:
a. A CAAA will be incorporated as a not for profit corporation under the federal regime.
b. Irrelevant consideration were taken into account such as the statement by the Minister that there were similarities and linkage between TCF and A4A.
11. In relation to the first issue, the condition in paragraph (a) of the definition of CAAA is that the association “was created under any law in force in Canada”. Therefore, there was no requirement that a CAAA must be formed under a federal law. An organization incorporated under the former Society Act of British Columbia would satisfy this requirement.
12. In relation to the second issue, the Court held that there was no basis to find that there was any particular error committed by the CRA or the Minister in reviewing and addressing the two applications at the same time.
13. In summary, the Court found that the Minister erred in:
(a) treating its CRA list of acceptable purposes and functions as being the only acceptable purposes and functions for an organization to qualify as a CAAA;
(b) denying the registration of TCF as a RCAAA on the basis that the Minister was unable to draw an analogy between providing financial assistance to teams and clubs and any of the exclusive purposes and functions of an existing CAAA that has been registered as a RCAAA;
(c) reading into the definition of CAAA a requirement that an eligible organization must directly promote amateur athletics.
14. The matter was referred back to the Minister for further consideration for redetermination in accordance with the Court’s reasons.
Implications of the case:
The appeal was heard at the same time as Athletes 4 Athletes Foundation v. Canada (National Revenue) 2021 FCA 145, which involved similar issues and was delivered by the Court at the same time. That case note contains a summary of the reasoning of the Court and also some implications to consider.
The case may be viewed at: