A.Y.S.A. Amateur Youth Soccer Association: A Charity “Kick Off”?
On May 16, 2007 the Supreme Court of Canada (“SCC”) heard the appeal in the case of A.Y.S.A. Amateur Youth Soccer Association v. Canada Revenue Agency, 2007 SCC 42 [AYSA]. This case, which deals with tax and charities, could potentially stand to redefine the definition of “charitable purpose.”
The appellant, A.Y.S.A., is an association that provides opportunities for youth to develop their soccer skills, as well as pride in their abilities. Specifically, they fulfill these objectives by administering skill development camps, scheduling games and tournaments, and running coach camps. Their goals is to improve time management skills, attitude toward teamwork and fitness and to increase the amount of time spent engaging in physical fitness as opposed to antisocial behaviour or illegal activities. A.Y.S.A. submitted an application for registration as a charity under the Income Tax Act, RSC 1985, c 1 (5th Supp), on the basis that their activities would be offered solely in Ontario. The Minister of National Revenue denied this application, however, on the grounds that the appellant’s formal purpose and objective are to promote the prominence of soccer, which is not recognized by the courts as a charitable purpose and leaves the A.Y.S.A. unqualified for registration as a charity.
While A.Y.S.A. agrees that the majority of common law authorities do not regard the promotion of sport as a charitable purpose, they rely on an Ontario High Court of Justice, Division Court authority in Re Laidlaw Foundation (1984), 48 OR (2d) 549, 13 DLR (4th) 491 at 506 and 523-24 [Re Laidlaw Foundation], which held that the promotion of amateur sport that involves the pursuit of physical fitness is considered a charitable purpose. They also argued that s. 8.1 of the Interpretation Act, RSC 1985, c I-21 supports their reliance on the Re Laidlaw Foundation case as it states that in interpreting property and civil rights enactments, it is necessary to refer to a province’s rules, principles or concepts that apply at the time of application of the enactment, which in this case concerns the definition of a registered charity under the Income Tax Act. Since the soccer activities run by the A.Y.S.A. in this case occur only within Ontario, they argue that the common law of Ontario should apply to determine its evaluation for status as a charitable organization.
At the Federal Court of Appeal, the court dismissed A.Y.S.A’s appeal on the basis that it is unnecessary to consider the common law of Ontario because the Income Tax Act prevents the appellant from being registered as a charitable organization by already providing for their tax status. Donors of gifts to “Registered Canadian amateur associations” and registered charities are allowed to claim deductions for their donations under s. 110.1(1) and 118.1(1) of the Income Tax Act and both these types of organizations are tax exempt. The term “registered Canadian amateur athletic association” is limited, however, in paragraph 248(1) to organizations that promote amateur athletics in Canada on a nation-wide basis, which would preclude the appellant from being considered under this category. The Federal Court of Appeal believed that Parliament did not want to assist the funding of amateur associations that were limited to a region or province, and thought that this prohibited such amateur associations from being treated as charities. This resulted in the A.Y.S.A. being denied the special tax status given to amateur athletic associations or registered charities as defined in the Income Tax Act.
Rather than follow the approach of the Federal Court of Appeal, it will be interesting to see if the SCC considers the issue of whether amateur sporting activities in and of themselves are considered to have a charitable purpose. With the rising epidemic of obesity among children, the need for programs to keep youth away from crime and out of trouble, and with various studies suggesting both physical and mental benefits associated with regular exercise and physical activity, allowing organizations whose purpose is to promote healthy activity among our youth through sports to be registered as charities would certainly be a worthy step forward in the law concerning charitable purposes. This would not only serve to encourage healthy, active lifestyles for Canadian youth, but also assist in focusing their efforts on the pursuit of sports, leaving less free time for unsavory activities.