Blog 145: Tax Privileges of Religions

Pierre Marchand

Publication Date: 2024-10-20

We recently learned in the Journal de Montréal that the city of Montreal had given a tax holiday to a centre owned by the Muslim Association of Canada (MAC) where an activist celebrates the terrorist attacks against Israel. We can be outraged, but the city had no choice: it is a consequence of the law on registered charities.

At the federal level, registered charities are exempt from income tax, property tax as well as municipal and school taxes. They can also recover a portion of any sales tax they have paid. To get a clear idea of ​​the situation, note that in Quebec, in 2019, there were 3701 registered charities working to relieve poverty, 2568 working for the advancement of education and 4330 working for the advancement religion.

According to Revenu Québec and the CRA, there are currently 15,828 registered charities in Quebec. There are between 3995 and 4156 that participate in the advancement of religion, including 71 or 72 Muslim ones.

According to research by Professor Luc Grenon of the University of Sherbrooke, religious registered charities collect approximately 40% of donations eligible for the tax credit, and half of them simply declare that they provide no public benefit, since all their activities are related to faith and worship. This is the case, for example, of organizations of cloistered nuns who devote their lives to prayer.

Canada thus grants registered charity status to hundreds of organizations that offer no social benefit other than that of “promoting religion.” “Among religious organizations, just over half (521 out of 1039) declare that they invest 100% of their time and resources in activities exclusively related to faith or religious worship.”

The advancement of religion (propaganda, proselytism, pastoral activities, missionary work) must therefore be removed from the definition of charitable purposes in federal and provincial laws, since these activities only benefit the organizations themselves. If churches support charitable works, fine, they can deduct the cost of their contribution, but not the cost of their propaganda.

In Quebec, section 204 of the Act Respecting Municipal Taxation stipulates that the following are exempt from all property, municipal or school taxes:

“(8) an immovable included in a unit of assessment entered on the roll in the name of an episcopal corporation, a fabrique, a religious institution or a Church constituted as a legal person, and principally used for the exercise of public worship, either as an episcopal palace or as a presbytery, to the extent of only one for each church, and its immediate dependencies used for the same purposes;”

and

“(12) an immovable included in a unit of assessment entered on the roll in the name of a religious institution or fabrique and used by it or gratuitously by another religious institution or fabrique not to derive income but in the immediate pursuit of the religious or charitable objects for which it was established, and its immediate dependencies used for the same purposes.”

This law was adopted in 1979. Before that date, one might have assumed that there were only two active religions to take into account, but in the midst of the Quiet Revolution, the clergy and its sympathizers probably wanted to cover their backsides. But things have changed. There are now hundreds of sects and religions that claim this exemption. There are also GST and QST exemptions for so-called charitable organizations.

Perhaps it is time for the Quebec government to repeal this section. It is no longer reasonable for municipalities, and therefore all property tax payers, to fund this exemption. These organizations may have been in charge of education, health and senior care in the past, but this is no longer the case, as it is now the Quebec State that pays the costs of public services. Since the State is now secular, it must harmonize its laws with this definition.

(It is not normal that citizens, especially non-believers, pay for these institutions. If believers believe in them to the point of wanting to finance them, that is up to them.)

Do these organizations have the means to do so? Yes, according to Marie-Claude Girard.

But can Quebec act alone without changing federal laws?