One of the clearest items of charity law is that action for the relief of poverty are considered to be charitable.
But the ongoing problem for many charities is to try to identify an income level which can be used as a measure of who is poor. This is not always an easy task as most guides dealing with this issue are simplistic in the extreme, not usable in many situations.
For example, some years ago we were asked whether aid to a fully employed school teacher whose salary was $55,000 a year was justifiable as “relief of poverty”. It turned out that he and his family lived in Toronto which was one of the most expensive cities in Canada. Further he had nine children living with him and his (non-earning) wife in a six bedroom house.
Attempting to massage the generic guides about the “poverty line” required difficult massaging of the numbers and producing a document which would satisfy a CRA audit if it came.
While this might be an extreme case, it is not unique. Anybody who has spent significant time in Nunavut of the Northwest Territories can attest to the fact that Southern norms really do not apply in the Arctic.
Now a new initiative by the federal government may give some greater guidance in such situations.
In early November, Jean-Yves Duclos, Minister of Families, Children and Social Development, tabled legislation as part of Opportunity for All – Canada’s First Poverty Reduction Strategy which was launched in August.
The Bill proposes to entrench into legislation ambitious and concrete poverty reduction targets; a 20 % reduction in poverty by 2020 and a 50 % reduction in poverty by 2030, relative to 2015 levels. These targets will lead to the lowest poverty rate in Canada’s history.
Also for the first time in Canada’s history, the Bill proposes to entrench into legislation an official measure of poverty: Canada’s Official Poverty Line. Formerly known as the Market Basket Measure, Canada’s Official Poverty Line would be based on the cost of a basket of goods and services that individuals and families require to meet their basic needs and achieve a modest standard of living in communities across the country. (Our emphasis.)
At the time the announcement was made, a lengthy background paper was issued. Of most interest is Part 9 entitled “Improving measurement of Poverty”.
In 2015, 1 in every 8 or 12.1% of Canadians lived in poverty. Meeting these targets will mark a significant reduction in poverty in our country, with 1 in 10 or 9.7% of Canadians living in poverty by 2020, and 1 in 17 or 6.1% of Canadians living in poverty by 2030. This would lift 2.1 million Canadians out of poverty, based on Canada’s population in 2015. Meeting these targets will mark historic lows in Canadian poverty rates.
Canada’s Official Poverty Line is based on the cost of a basket of goods and services individuals and families need in order to meet their basic needs and achieve a modest standard of living in communities across Canada. The reference family for calculating Canada’s Official Poverty Line is two adults between 25 and 49 years, and two children, a 9-year-old girl and a 13-year-old boy. These expenditures are then adjusted for family size and extrapolated to all other Canadians. If Canadians cannot afford this basket of goods and services, then they will be considered to be living in poverty.
The basket of goods and services includes items such as clothing and footwear, transportation, nutritious food and shelter (including electricity, heat and clean water), and other necessary goods and services, such as personal care items and household supplies.
The cost of the basket of goods and services is adjusted to reflect the cost of living in 50 different communities across Canada. This covers all the provinces, 19 specific communities and 31 provincial regions according to population size. The plan to improve the measurement of poverty will also include closing gaps in the North by expanding the Canadian Income Survey so that Canada’s Official Poverty Line can be calculated in the territories. In addition, Statistics Canada will explore the feasibility of ensuring that the basket of goods and services reflects the unique costs of living in Canada’s northern and remote communities. Statistics Canada will also regularly update the cost and the items within the basket of goods and services to ensure that it continues to reflect what Canadians require to meet their basic needs and achieve a modest standard of living. The Government is committed to improving measurement and data collection to inform progress in poverty reduction.”
There are many charts in the document but the one we found most interesting was the measure for a family of four, two adults and two children. The chart (based on 2015 data) gives guidance for fifty locales across the country, taking into account such things as the size of the communities in which people live for the family of four, the poverty line in parts of Alberta was set at $40,777 while in parts of Quebec, the figure was $32, 871. For single individuals, the line is set at one-half of that of the family of four.
The legislation is now working its way through Parliament but we don’t know when it will actually be enacted into law.
We also don’t know whether the legislation (and presumably regulations) will be such that we can fine tune specific situation such as the one’s we cited at the start of this article though already there is help in the chart we referred to which takes into account locale costs.
We also don’t know whether the CRA’s Charity Directorate will see itself bound by the new legislation which is not directly binding upon the tax authorities. But at the very least, the data under the new legislation will obviously be persuasive in any argument with CRA auditors.
One way or the other, this legislation promises to be a big and useful step forwards.
By: Arthur Drache
 It should be noted that actions to prevent poverty are not considered to be charitable by the Canadian courts. See Credit Counselling Services of Atlantic Canada v. MNR, 2016 FCA 193 and the article in our August 2016 issue at page 57.