PEN Canada now in the crosshairs of Canada Revenue charity audit team

If you wondered whether the flying squad set up at Canada Revenue Agency to target charities for overstepping the allowable amount of political activity is close to the magazine business and journalism, think no longer. The Canadian Press reports that CRA has in its sights PEN Canada, which champions freedom of expression at home and abroad. It is perhaps best known for highlighting imprisoned journalists and writers around the world, but in the course of its work it has been highly critical of the Harper government and its policies. 

Two tax auditors showed up Monday morning at the tiny Toronto offices of PEN Canada, asking to see a wide range of internal documents. 

PEN Canada's president, Philip Slayton, says the tax agency gave notice of the audit two or three months ago, and that the group is "fully co-operating."

The federal government built an item into its budget in 2012 to finance special teams targetting charities such as  Amnesty International Canada, the Canadian Centre for Policy Alternatives, Environmental Defence, Canada Without Poverty, and the David Suzuki Foundation, although the CRA says it receives no direction from the government or the cabinet. 

A number of charities have said that they are feeling a distinct "audit chill", made worse by the fact that the possible loss of their charitable status hangs over them like a Damoclean sword, sometimes for years. The PEN Canada audit could take a year or more. 

Charities are permitted to spend up to 10 per cent of their resources on political activities, based on a 2003 government policy, though they cannot endorse any party or candidate.Slayton says PEN Canada has abided by the rules, but there are grey areas. 

Slayton said that the wave of audits raises the question of whether charitable status is worth having:

 "I refuse to let it have a chilling effect on us, We are not going to have some kind of fear — about having our charitable status questioned by authorities — stop us speaking out on issues ...If it means you have to live in fear of the revenue authorities, and if it means that there are things you want to say, you feel you should say, but you feel you cannot say because of the rules, well then, what price charitable registration?"