A-537-86
Alberta Institute on Mental Retardation (Appel-
lant)
v.
The Queen (Respondent)
INDEXED AS: ALBERTA INSTITUTE ON MENTAL RETARDATION
v. CANADA
Court of Appeal, Pratte, Heald and Mahoney
JJ.-Edmonton, May 14; Ottawa, June 23, 1987.
Charities - Charitable corporation - Fund-raising vehi
cle for charities helping mentally retarded - Entering into
arrangement with second hand store - Taxpayer collecting
used goods for store - Receiving $2,000 monthly plus 50% of
sales over $2,000 - All funds received from store used for
charity - Minister denying charitable registration as taxpayer
(1) not operating exclusively for charitable purposes and (2)
carrying on business other than "related business" - Statu
tory scheme - Argument that taxpayer wholesaler to store
and carrying on business under s. 248(1) rejected - Involve
ment with commercial enterprise not end but means of fulfill
ing charitable purposes - Appellant's sole purpose to raise
money for benefit of retarded - As to "related business",
Court approving tests in Drache work on taxation of charities
- Appeal allowed - Income Tax Act, S.C. 1970-71-72, c.
63, ss. 110(8)(c) (as am. by S.C. 1984, c. 45, s. 35(7)), 149(1)(f)
(as am. by S.C. 1976-77, c. 4, s. 59(1)), 149.1 (as added idem,
s. 60(1)), (1) (as am. by S.C. 1984, c. 45, s. 57), (a),(b) (as am.
idem, s. 57(2)), (f),(g) (as am. idem, s. 57 ( 4 )), (j),( 2 )(a),(b) (as
am. idem, s. 57(8)), (3)(a),(b) (as am. idem, s. 57 ( 9 )), (c) , (d) , (e) ,
248(1) (as am. by S.C. 1976-77, c. 4, s. 76(2); 1979, c. 5, s.
66(3)).
Income tax - Corporations - Charities - Registration of
charity under Income Tax Act - "Related business"
Registrability as charity of corporate entity engaging in com
mercial activity but turning over all funds received to regis
tered charities - Income Tax Act, S.C. 1970-71-72, c. 63, ss.
110(8)(c) (as am. by S.C. 1984, c. 45, s. 35(7)), 149(1)U1 (as
am. by S.C. 1976-77, c. 4, s. 59(1)), 149.1 (as added idem, s.
60(1)), v (1) (as am. by S.C. 1984, c. 45, s. 57), (a),(b) (as am.
idem, s. 57(2)), (f),(g) (as am. idem, s. 57 ( 4 )), (j),(2)(a),(b) (as
am. idem, s. 57(8)), (3)(a),(b) (as am. idem, s. 57 ( 9 )), (c) , (d),(e),
248(1) (as am. by S.C. 1976-77, c. 4, s. 76(2); 1979, c. 5, s.
66(3)).
The appellant is a corporation constituted exclusively for
charitable purposes. It was to serve as a fund-raising vehicle for
various registered charities helping the mentally retarded. To
that end, the appellant and a second hand business entered into
an arrangement whereby the appellant would solicit and collect
used household items which the business would sell at a profit.
In return, the appellant was to receive a minimum monthly
advance of $2,000 plus 50% of all sales in excess of the monthly
guaranteed amount. All the funds received by the appellant
pursuant to that arrangement were to be turned over to various
registered charities helping the mentally retarded. This is an
appeal from the Minister of National Revenue's refusal to
register the appellant as a "registered charity" within the
meaning of paragraph 110(8)(c) of the Income Tax Act.
The issues are (1) whether, in view of its arrangement with a
commercial enterprise, the appellant is operating exclusively for
charitable purposes and (2) whether the appellant is carrying
on a business that is not a "related business" within the
meaning of section 149.1 of the Act.
Held (Pratte J. dissenting), the appeal should be allowed.
Per Heald J. (Mahoney J. concurring): It cannot be said that
the appellant was not operating in fulfillment of any of its
charitable purposes since one of the provisions of its Memoran
dum of Association empowers it to raise funds for the purpose
of carrying out its objects. And it is far from irrelevant that all
funds collected were given to charitable organizations as set out
in the objects of the appellant. Nor does the association with a
commercial enterprise necessarily mean that the appellant is
carrying on a business as defined in subsection 248(1) of the
Act. In this case, the business aspect of the operation is merely
incidental to the attainment of the charitable objects of the
appellant. It follows that the appellant can be said to be
operating exclusively for charitable purposes.
Furthermore, the business carried on by the appellant,
assuming that it is a business, is a "related business" within the
meaning of paragraph 149.1(3)(a) of the Act. The appellant
meets two of the four criteria suggested, after noting the
paucity of case law on the subject, by Arthur B. C. Drache in
Canadian Tax Treatment of Charities and Charitable Dona
tions: (1) there is a very close connection between the activity
and the charity and (2) there is no profit motive in the
appellant's operation. The "competition" and "length of time"
criteria cannot be applied herein. This interpretation is con
sistent with the intention to recognize the contemporary reality
of the fund-raising activities of modern charitable organiza
tions.
Per Pratte J. (dissenting): While there is no doubt that the
appellant is a charitable foundation that uses all its income for
charitable purposes, its commercial operation cannot be said to
be related to its charitable objects. There is no doubt that it is a
"business" within the meaning of paragraph 149.1(3)(a).
A business can be said to be related to the objects of a
charity when the commercial activity can be said to be con
tributing to the realization of the charitable objects of the
charity. It is not sufficient that all the income from a business
operated by a charity is used for charitable purposes, otherwise
paragraph 149.1(3)(a) would be devoid of effect. It would
apply only when the income from the business was not used for
charitable purposes. But there would be no need to invoke that
provision since registration could be revoked on the ground that
the foundation is not operated exclusively for charitable
purposes.
CASES JUDICIALLY CONSIDERED
APPLIED:
British Launderers' Research Association v. Borough of
Hendon Rating Authority, [1949] 1 K.B. 462; Guaranty
Trust Company of Canada v. Minister of National Reve
nue, [1967] 1 S.C.R. 133; (1966), 67 DTC 5003.
DISTINGUISHED:
Hutterian Brethren Church of Wilson v. R., [1980] 1
F.C. 757; (1979), 79 DTC 5474 (C.A.).
REFERRED TO:
McLeod, James B., v. Minister of Customs and Excise
(1925), 1 DTC 73 (Ex. Ct.).
COUNSEL:
C. Philip Clarke and Chereda L. Bodner for
appellant.
Helen C. Turner for respondent.
SOLICITORS:
Field & Field, Edmonton, for appellant.
Deputy Attorney General of Canada for
respondent.
The following are the reasons for judgment
rendered in English by
PRATTE J. (dissenting): I have had the advan
tage of reading the reasons for judgment prepared
by my brother Heald. I regret not to be able to
agree with him.
The appellant is undoubtedly a charitable foun
dation that 'uses the whole of its income for chari
table purposes. However, I am of opinion that it
carries on a business that is unrelated to its chari
table objects. For that reason, I cannot criticize
the Minister's decision refusing to register it as a
registered charity.
The expression "business" found in paragraph
149.1(3)(a) of the Income Tax Act [R.S.C. 1952,
c. 148 (as am. by S.C. 1970-71-72, c. 63, s. 1;
1976-77, c. 4, s. 60(1))] is given a very wide
definition by subsection 248 (1) [as am. by S.C.
1979, c. 5, s. 66(3)]; in the French version of
paragraph 149.1(3)(a), it is rendered by the
phrase "activité commerciale" which, though not
defined in the Act, has also a very wide meaning.
In my opinion, the appellant, when it collects used
clothing or other household items and sells them at
a profit, is clearly both carrying on a business and
engaged in a commercial activity. The only ques
tion, in my view, is whether that business or
commercial activity is related to the charitable
purposes of the appellant.
When can a business be said to be related to the
objects of a charity?—When, in my view, there
exists between the commercial activity in question,
considered in itself, and the charitable objects of
the charity such a relationship that it can be said
that by engaging in the commercial activity in
question the charity is, in effect, contributing to
the realization of its charitable objects. For
instance, such a relationship can be said to exist
between the commercial operation of a parking lot
or a cafeteria and the operation of a hospital. The
mere fact that the whole of the income derived
from a business operated by a charity is used for
the charitable purpose of the charity is not suffi
cient to make that business a related business. And
this is so because the necessary relationship must
exist between the charitable objects and the com
mercial activity or business itself. If it were suffi
cient, in order to create the necessary relationship,
that the income of the business be entirely used for
charitable purposes, paragraph 149.1(3)(a) would
be devoid of effect. Indeed, according to that
interpretation, the Minister could only cancel a
registration on the ground that the charity oper
ates a business "that is not related" if the income
derived from that business was not used for chari
table purposes; in such a case, however, there
would be no need for the Minister to invoke para
graph 149.1(3)(a) since he could revoke the regis
tration on the ground that the foundation is not
operated exclusively for charitable purposes.
I would dismiss the appeal with costs.
* * *
The following are the reasons for judgment
rendered in English by
HEALD J.: This is an appeal from a decision of
the Minister of National Revenue refusing the
appellant's application for registration as a "regis-
tered charity" as that expression is defined in
paragraph 110(8)(c) of the Income Tax Act [as
am. by S.C. 1984, c. 45, s. 35(7)]. The appellant,
constituted exclusively for charitable purposes, and
incorporated under the laws of Alberta for such
purposes, was established by the Alberta Associa
tion for the Mentally Handicapped (the Associa
tion). The appellant was to serve as a fund-raising
vehicle for various registered charities carrying on
programmes for the benefit of persons suffering
from mental retardation. For that purpose, the
appellant entered into a fund raising arrangement
with Value Village Stores Ltd. (Value Village).
Value Village was a British Columbia corporation,
which also operated in Alberta. It was operated for
profit and was completely independent of the
appellant.
The contract between the appellant and Value
Village provided that:
(a) used household items were to be solicited
and collected by the appellant using collection
vehicles leased by the appellant from Value
Village;
(b) the appellant was to be reimbursed by Value
Village for all expenses incurred by the appellant
in the course of its solicitation and collection
activities; and
(c) Value Village agreed to provide to the appel
lant minimum monthly advances of $2,000 in
respect of the sale of the goods collected pursuant
to (a) supra. Value Village further agreed to
contribute 50% of all retail sales in excess of the
guaranteed monthly advance of $2,000.
The agreement between the appellant and the
Association was to the effect that all of the funds
received by the appellant from Value Village were
forwarded to the Association for its use in chari-
table projects. There is no suggestion that this
term of the agreement was not carried out.
The appellant applied to the Minister of Nation
al Revenue for registration as a "registered chari
ty" on the basis that it was a "public foundation"
as that term is defined in the Income Tax Act.
This application was refused because, in the view
of the Minister, the appellant was:
(a) not operating exclusively for charitable pur
poses; and
(b) it was carrying on a business other than a
"related business" as partially defined in para
graph 149.1(1)(j) of the Income Tax Act [as
added by S.C. 1976-77, c. 4, s. 60(1)].
THE ISSUES
The issues in this appeal are twofold and may be
shortly stated:
(a) Whether, because of its relationship with
Value Village, the appellant is not operating exclu
sively for charitable purposes; and
(b) Whether the appellant is carrying on a busi
ness that is not a "related business" within the
meaning set out in section 149.1 of the Income
Tax Act [as added by S.C. 1976-77, c. 4, s. 60(1)].
THE STATUTORY SCHEME
The relevant sections of the Income Tax Act for
the purposes of this appeal are:
149. (1) No tax is payable under this Part upon the taxable
income of a person for a period when that person was
(J) a registered charity; [as am. by S.C. 1976-77, c. 4, s.
59(1)]
248. (1) In this Act,
"business" includes a profession, calling, trade, manufacture or
undertaking of any kind whatever and, except for the pur
poses of paragraph 18(2)(c), an adventure or concern in the
nature of trade but does not include an office or employment;
"registered charity" has the meaning assigned by subsection
110(8); [as am. by S.C. 1976-77, c. 4, s. 76(2)]
110. (8) In this section,
(c) "registered charity" at any time means
(i) a charitable organization, private foundation or public
foundation, within the meanings assigned by subsection
149.1(1), that is resident in Canada and was either created
or established in Canada, or
(ii) a branch, section, parish, congregation or other divi
sion of an organization or foundation described in subpara-
graph (i), that is resident in Canada and was either
created or established in Canada and that receives dona
tions on its own behalf,
that has applied to the Minister in prescribed form for
registration and that is at that time registered as a charitable
organization, private foundation or public foundation.
149.1 (1) In this section, section 172 and Part V, [as am. by
S.C. 1984, c. 45, s. 57]
(a) "charitable foundation" means a corporation or trust
constituted and operated exclusively for charitable purposes,
no part of the income of which is payable to, or is otherwise
available for, the personal benefit of any proprietor, member,
shareholder, trustee or settlor thereof and that is not a
charitable organization; [Emphasis added.]
(b) "charitable organization" means an organization, wheth
er or not incorporated,
(i) all the resources of which are devoted to charitable
activities carried on by the organization itself,
(ii) no part of the income of which is payable to, or is
otherwise available for, the personal benefit of any proprie
tor, member, shareholder, trustee or settlor thereof,
(iii) more than 50% of the directors, trustees, officers or
like officials of which deal with each other and with each
of the other directors, trustees, officers or officials at arm's
length, and
(iv) where it has been designated as a private foundation
or public foundation pursuant to subsection 110(8.1) or
(8.2) or has applied for registration under paragraph
110(8)(c) after February 15, 1984, not more than 50% of
the capital of which has been contributed or otherwise paid
in to the organization by one person or members of a
group of persons who do not deal with each other at arm's
length and, for the purpose of this subparagraph, a refer
ence to any person or to members of a group does not
include a reference to Her Majesty in right of Canada or a
province, a municipality, another registered charity that is
not a private foundation, or any club, society or association
described in paragraph 149(1)(l); [as am by S.C. 1984, c.
45, s. 57(2)]
(/) "private foundation" means a charitable foundation that
is not a public foundation;
(g) "public foundation" means a charitable foundation of
which,
(i) where the foundation has been registered after Febru-
ary 15, 1984 or designated as a private foundation or
charitable organization pursuant to subsection 110(8.1) or
(8.2),
(A) more than 50% of the directors, trustees, officers or
like officials deal with each other and with each of the
other directors, trustees, officers or officials at arm's
length, and
(B) not more than 50% of the capital contributed or
otherwise paid into the foundation has been so con
tributed or otherwise paid in by one person or members
of a group of such persons who do not deal with each
other at arm's length, or
(ii) in any other case,
(A) more than 50% of the directors or trustees deal with
each other and with each of the other directors or
trustees at arm's length, and
(B) not more than 75% of the capital contributed or
otherwise paid in by one person or by a group of persons
who do not deal with each other at arms' length
and, for the purpose of clause (i)(B), a reference to any
person or to members of a group does not include a reference
to Her Majesty in right of Canada or a province, a munici
pality, another registered charity that is not a private founda
tion, or any club, society or association described in para
graph 149(I)(1); [Emphasis added.] [as am. idem, s. 57(4)].
(j) "related business" in relation to a charity includes a
business that is unrelated to the objects of the charity if
substantially all of the people employed by the charity in the
carrying on of that business are not remunerated for such
employment; [Emphasis added.]
(2) The Minister may, in the manner described in section
168, revoked the registration of a charitable organization for
any reason described in subsection (1) of that section or where
the organization
(a) carries on a business that is not a related business of that
charity; or
(b) fails to expend in any taxation year, on charitable activities
carried on by it and by way of gifts made by it to qualified
donees, amounts that, in the aggregate, are at least equal to the
amount that would be determined for the year under subpara-
graph (1)(e)(i) in respect of the organization if it were a
charitable foundation. [as am. idem, s. 57(8)]
(3) The Minister may, in the manner described in section
168, revoke the registration of a public foundation for any
reason described in subsection (1) of that section or where the
foundation
(a) carries on a business that is not a related business of that
charity;
(b) fails to expend in any taxation year, on charitable activities
carried on by it and by way of gifts made by it to qualified
donees, amounts that, in the aggregate, are at least equal to its
disbursement quota for that year; [as am. idem, s. 57(9)]
(c) since June 1, 1950, acquired control of any corporation;
(d) since June 1, 1950, incurred debts, other than debts for
current operating expenses, debts incurred in connection with
the purchase and sale of investments and debts incurred in the
course of administering charitable activities; or
(e) at any time within the 24 month period preceding the day
on which notice is given to the public foundation by the
Minister pursuant to subsection 168(I) and at a time when the
public foundation was a private foundation, took any action or
failed to expend amounts such that the Minister was entitled,
pursuant to subsection (4), to revoke its registration as a
private foundation. [Emphasis added.]
ISSUE A—IS THE APPELLANT OPERATING
EXCLUSIVELY FOR CHARITABLE PURPOSES?
At the outset, and in response to a question from
the Court, counsel for the respondent agreed that
the imposition of the appellant, a corporate entity,
into the Association's fund-raising activities is not
a factor in the determination of the issues in this
appeal. It was her position that although the appel
lant corporation was constituted exclusively for
charitable purposes, it is not being operated exclu
sively for charitable purposes as required by para
graph 149.1(1)(a) supra. She submitted that since
the appellant's sole activity is its commercial
involvement with Value Village in which it is
acting as a wholesaler supplying goods to Value
Village, it is in fact carrying on a business in the
ordinary sense. In her view, such an activity would
be encompassed by the definition of business con
tained in subsection 248(1) of the Act supra. It
was her further submission that since the fund-
raising arrangement with Value Village is present
ly the appellant's sole activity, it is not operating in
fulfillment of any of its charitable purposes as
described in its Memorandum of Association
(Case, pages 10 and 11).
Dealing initially with her last submission relat
ing to lack of fulfillment of any of the charitable
purposes enumerated in the Memorandum of
Association, I see no merit in this submission.
Subparagraphs 2(a) to (h) of the Memorandum
set out objects, all of which, inter alia, relate to the
welfare of persons suffering from mental retarda-
tion and other developmental handicaps and the
welfare of their families as well. Subparagraph
2(j)(i) empowers the appellant "to raise funds for
the purpose of carrying out the objects of the
company in a manner not inconsistent with the
objects of the company." The raising of funds
permitted pursuant to subparagraph 2(j)(i) is just
as much an object of the appellant as any of the
other objects enumerated in paragraph 2. As noted
supra, all monies collected were given to chari
table organizations as set out in the objects of the
appellant. Accordingly, I conclude that the appel
lant's charitable purposes as described in the
Memorandum of Association were being fulfilled.
Turning now to the submission that the appel
lant is carrying on a business as defined in subsec
tion 248(1) of the Act because of its commercial
involvement with Value Village, I do not think
that the association of a charitable organization
with a commercial enterprise necessarily impresses
that charitable organization with the characteris
tics of a "business" within the definition set out in
subsection 248(1) supra. Where, as in this case,
the involvement of the charitable organization
with a commercial enterprise is not an end or
purpose in itself but is merely a means to the
fulfillment of the purposes of the charitable organ
ization which are exclusively charitable, that
involvement will not result in the charitable organ
ization losing its exemption.' In that case, Lord
Denning goes on to point out, however, that if such
an "incidental" purpose ceases to be a means to an
end and becomes an end in itself, it becomes an
additional or collateral purpose of the organiza
tion, thereby transforming it into an organization
which is no longer exclusively charitable. Such a
circumstance would cause it to lose its exemption.
In my view, such a change has not occurred in the
case at bar so as to make the appellant an organi
zation having a number of purposes, some chari
table and some non-charitable. Counsel for the
respondent cited the decision of this Court in
See: British Launderers' Research Association v. Borough
of Hendon Rating Authority, [1949] 1 K.B. 462, at p. 467, per
Denning L.J. This decision was followed by the Supreme Court
of Canada in Guaranty Trust Company of Canada v. Minister
of National Revenue, [1967] S.C.R. 133; (1966), 67 DTC
5003.
Hutterian Brethren Church of Wilson v. R. 2 The
facts in that case present a classic example of an
organization with mixed objects, some charitable
and some non-charitable since there that appellant
was, inter alia, in the business of farming for a
profit. That, however, is not the situation in the
particular circumstances of this case. The sole
purpose of the appellant, at all times, has been and
is to raise money for the benefit of persons (and
their families) suffering from mental retardation.
The means chosen to raise such monies, i.e., the
solicitation for and collection of used goods is, in
reality, simply a conversion of goods into money
and does not itself change the nature of the appel
lant's operation in any way.'
For these reasons I have concluded that, in the
somewhat unusual circumstances here present
where all of the monies received are dedicated to
the charitable purposes for which the appellant
was incorporated and where the business aspect of
the operation is merely incidental to the attain
ment of its charitable objects, the appellant can,
indeed, be said to be operating exclusively for
charitable purposes.
ISSUE B—IS THE APPELLANT CARRYING ON A
BUSINESS THAT IS NOT A "RELATED BUSINESS"?
Since I have concluded that the appellant is
operating exclusively for charitable purposes, it
would appear that it meets the definition of chari
table foundation as set out in paragraph
149.1(1) (a) of the Act. Likewise, it appears to
meet the definition of "public foundation" set out
in paragraph 149.1(1)(g) of the Act. Thus, prima
facie, it would appear to be entitled to registration
as a public foundation. However, paragraph
149.1(3)(a) provides for de-registration of a public
foundation where it carries on a business that is
not a related business of that foundation. In the
view of the respondent, the appellant carries on a
business that is unrelated to its charitable objec
tives. As noted earlier herein, the respondent has
the view that because of the contractual relation
ship between the appellant and Value Village, the
2 [1980] 1 F.C. 757; (1979), 79 DTC 5474 (C.A.).
3 Compare: McLeod, James B., v. Minister of Customs and
Excise (1925), 1 DTC 73, at p. 76, Exchequer Court of Canada
per Maclean J.
appellant is carrying on a business in the ordinary
sense of the word and as defined in subsection
248(1). The retail/wholesale relationship antici
pates profits and has in fact produced profits for
the appellant. Pursuant to the terms of the agree
ment with Value Village, the appellant assumes
commercial risks and obligations as set out in the
agreement. In the view of the respondent, the
major focus for the appellant must be its commer
cial operations. Finally, the respondent refers to
the definition of "related business" as set out in
paragraph 149.1(1)(j). Her submission is that
since "substantially all" of the employees of the
appellant who are engaged in carrying out the
appellant's obligations under the contract with
Value Village are paid by the appellant, the condi
tion set out in paragraph 149.1(j) has not been
satisfied. It is the respondent's further submission
that the appellant's commercial operation is not
converted into a "related business" simply because
the funds generated by its commercial activities
are dedicated solely to charitable purposes. In her
submission, the fund-raising activities of the appel
lant are incidental to its business activities and not
the reverse.
In view of my conclusion under Issue A supra,
that the business aspect of the appellant's opera
tion was merely incidental to the attainment of its
charitable objects, I doubt that the appellant can
be said to be carrying on business as that term is
generally understood. However, the definition of
"business" in subsection 248(1) is very wide. Since
that definition includes an "undertaking" and
since normal dictionary definitions of "undertak-
ing" include an "enterprise" which, by normal
definition includes "a firm or business" an argu
ment can be made that the appellant was here
engaged in an undertaking or business. However,
such a finding is not necessary or decisive in the
circumstances at bar because the real issue here is
whether the appellant's activity, assuming it to be
a "business" is a "related business". A useful
approach to the problem of defining a "related
business" is to be found in the work by Arthur B.
C. Drache entitled Canadian Tax Treatment of
Charities and Charitable Donations, Second Edi
tion, 1980. Mr. Drache, at page 12, quotes from
the Budget Speech of May 25, 1976, when the
charities amendments were being introduced in
Parliament. On that occasion the Minister of
Finance said:
Under the present rules, technically no charity can carry on a
business. Nonetheless, many charities do indeed carry on
worthwhile fund-raising activities which might be construed as
business activities. I see no reason to alter this situation as it
exists in practice. On the contrary, I want to bring the law into
conformity with the current standards of the community.
[Emphasis added.]
When these provisions were being considered in
Committee in the House of Commons, the Minis
ter gave as an example of a related business the
operation of a cafeteria on the premises of an art
gallery or a hospital. He said that "the basic
principle is that the activity should be related to
those of the charity and it should not become the
vehicle of a substantial commercial business."
After noting a "paucity of case law" on this
subject, Mr. Drache (pages 12-13) suggests four
different criteria for deciding this issue:
1. The degree of relationship of the activity to
the charity;
2. Profit motive;
3. The extent to which the business operation
competes with other businessmen; and
4. The length of time the operation has been
carried on by the charity.
Mr. Drache concludes by suggesting that "meeting
one or more of these tests will probably ensure that
the business activity will be acceptable from the
point of view of Revenue Canada." While it must
be understood that Mr. Drache's approach in this
article is more pragmatic than jurisprudential, the
tests suggested by him strike me as being in
accordance with the statutory scheme as well.
In my view, the factual situation at bar satisfies
the first test supra, because the commercial opera-
tion at bar is exclusively related to charitable
purposes since all monies collected are so allocat
ed. Accordingly, the commercial activity has a
very close connection with the charity. Likewise,
the second test is met since there is no profit
motive in the appellant's operation. All monies
received are remitted to the Association (including
the monies reimbursed to it for its solicitation and
collection activities). Insofar as the third test is
concerned, there is a lack of evidence on this issue.
Accordingly, it is not possible to make any finding
in this regard. Likewise, the fourth test has no
application here since the appellant has only been
in existence since 1985.
Based then on Mr. Drache's suggested tests, I
conclude that the appellant would satisfy those
tests insofar as the circumstances of this case are
concerned.
Dealing with the submission by the respondent
in respect of paragraph 149.1(1)(j), I do not think
the extended definition of "related business" as set
out therein has any application to these facts
because it operates only in respect of "a business
that is unrelated to the objects of the charity".
Since I have concluded that the appellant's "busi-
ness" here is closely associated with and related to
the objects of the charity, it is unnecessary to
consider the application of paragraph 149.1(1)(j).
If the operation of a cafeteria on the premises of
an art gallery or the operation of a parking lot
adjacent to and on premises owned by a hospital,
for example, can be said to be related businesses
even though the cafeteria and the parking lot may
be operated by concessionaires for profit, then
surely an activity such as that of this appellant
must be in the same category. This type of activity,
so long as it does not become "the vehicle of a
substantial commercial business" is of the kind
clearly envisaged by the charities amendments as
being included in the expression "related business
of that charity". Such an interpretation is con
sistent with the clear intention of Parliament to
recognize the contemporary reality insofar as the
fund-raising activities of modern charitable organ
izations are concerned.
Accordingly, and for all of the above reasons, I
would allow the appeal, set aside the decision of
the Minister and refer the matter back to the
Minister with the direction that the appellant be
granted registration as a registered charity. Since
the appellant did not ask for costs, and since no
special reasons were advanced in support of an
award of costs, I would make no order in respect
thereof.
MAHONEY J.: I agree.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.