Thank you for the question.

Of course, I can't speak about specific cases because of the confidentiality provisions of the Income Tax Act, but I am happy to speak generally about the rules.

I think the starting point has to be that there are a number of different ways in which charities can generate revenues. They can generate revenues through charitable programs. There's no limit on how much revenue they can generate through charitable programs. They can generate revenue through business activities, and there are rules around business activities. They need to be related business activities. If they meet all of the requirements laid out in the Income Tax Act, there's no limit to how profitable those things can be. Simply looking at the percentage of the business revenue in relation to the overall revenues wouldn't be a sufficient indicator from our perspective.

In a scenario similar to what you've described, where a charity's purpose is to help relieve employment of a group of at-risk youth, let's say, or help relieve the conditions associated or related to these at-risk youth, part of the activities of the charity could certainly be providing on-the-job training, training skills, and providing the kinds of opportunities that you've described. That could all very well be a charitable activity. It's going to be a factual determination based on the individual facts of the case.

The first question I would have is whether the activity is a charitable activity that allows the charity to generate revenue. If the activity is not a charitable activity, it could still be a related business activity. Charities are allowed to participate in related business activities to the extent that.... There are two forms of related businesses. One, either a business is linked and subordinate to the charitable purpose of the charity, so the charitable purpose always has to be the focus of the organization, or two, linkage is established by looking at whether it's a use of excess capacity or whether it's an offshoot of the charitable program. There is a number of criteria we would use to determine whether the business is a related business.

If the business is not linked to the charitable purpose, but it is run substantially by volunteers, then that is absolutely acceptable under the Income Tax Act. There are many rules in place currently that allow charities to generate the kinds of revenues and the kinds of social outcomes that you've described. You can find both of those in two of the policies we've put out. One is the community economic development policy and the other is our related business policy, which lays all of this out, including some examples, to help charities.

We are constantly looking at the policy work we do and the policies we have available to charities. We listen to the feedback that we hear from charities. A lot of times what they tell us is that examples are really helpful, and to the extent that we can provide examples of what's acceptable, those are the kinds of things that they're looking for.

I have one last comment on charities being concerned about their charitable status. Our approach is an education-first approach, whether it's through the educational materials we provide or through the compliance work we do. To the extent that we can work with charities, explain to them the rules, and help them get back on track, that's what we aim to do.

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