Human Concern International, based in Ottawa, is asking the high court to review the Federal Court of Appeal’s refusal to freeze the government-imposed suspension — which barred the charity from issuing tax receipts — while the sentence was challenged.
The Canada Revenue Agency imposed the one-year suspension in July 2021 after an audit by the revenue agency’s charities directorate raised concerns about six initiatives.
The suspension has now ended, but HCI is still pursuing the matter in court, saying it has significant implications for the charity sector as a whole.
In its application for a Supreme Court hearing, HCI says the rule of law in Canada will be “significantly diminished” if the court does not intervene.
The charity argues that federal agencies will have the power to impose sanctions before matters are brought to light – and before guilt is determined.
“Justice will be denied to innocent parties as government agencies will be free to extract punishment from citizens, even when the sentence cannot be reversed if a bureaucratic error is found at trial.”
Any other charities subject to revenue service audits “will live with that fear of suspension,” HCI executive director Mahmuda Khan said in an interview.  “And they’re also going to feel like, OK, we’ve got nowhere to go or there’s no way to hold the CRA accountable.  And that’s not the position we want to be in for charities in Canada.”
The revenue service accused HCI of improperly issuing donation receipts totaling more than $307,000 on behalf of organizations that run the six projects in question – a practice known as third-party receipt.
Initiatives included three education and health programs in India, orphan education and skills development in Bangladesh, orphan support in Somalia and an education program in Kenya.
HCI, Canada’s oldest Muslim global charity, says charities often partner with individuals and groups connected to the communities where the projects take place.
The charity insists it has always been committed to maintaining direction and control of its overseas projects and ensuring that all such projects carried out through third-party intermediaries are HCI’s own charitable activities.
HCI contested the suspension through the Internal Revenue Service’s administrative appeals process.  That appeal continues, Khan said.
At the same time, he asked the federal tax court to delay the implementation of the suspension until the revenue service examines the appeal.
In August 2021, a Tax Court judge refused to grant a stay of the suspension.
In a ruling earlier this year, a three-judge panel of the Federal Court of Appeal upheld the judge’s ruling, saying HCI had not raised any error warranting intervention.
The Court of Appeal also said there was no merit to HCI’s argument that the Tax Court should apply the principles of natural justice to ensure that the charity was not deprived of its right to a hearing on the merits before the suspension was imposed .
In its Supreme Court filing, HCI says it lost about $4 million in donations as a result of the suspension.
The charity has also incurred “significant legal fees”, Khan said.
HCI says that while the revenue service has an important public function in regulating the special status of charities, the public interest can be served by imposing a suspension once internal appeals to the service have been exhausted.
Federal attorneys have yet to file arguments in response.  The Supreme Court is expected to decide in the coming weeks whether to hear the case.
In a statement Thursday marking the end of the one-year moratorium, HCI said tax receipts will be issued for all eligible donations going forward.
“HCI is grateful that many of our donors stood by us during these difficult times while the one-year CRA moratorium was in place.  Supporting our humanitarian programs, despite our inability to issue tax receipts, is a testament to HCI’s 40-year track record in continuing our bond with our donors and beneficiaries,” the statement said.
“HCI worked tirelessly to minimize the impact of the suspension on our beneficiaries, including supporting tens of thousands of orphans, empowering vulnerable women, providing water aid, rebuilding Gaza or responding to emergencies in Afghanistan and Yemen” .