National Muslim charity launching legal challenge of CRA audit, calling it Islamophobic

A national charity that describes itself as Canada's largest grassroots Muslim organization is launching a Charter of Rights challenge against the Canada Revenue Agency, claiming that a years-long audit of the charity has been tainted by bias and Islamophobia.

The Muslim Association of Canada (MAC) plans to serve the government with its formal legal challenge today. 

MAC said the audit, which began in 2015, poses an "existential threat" to the organization because it threatens to revoke its charitable status and raises the possibility of damaging sanctions.

"An unfair decision by the CRA will affect the lives of thousands of Canadians overnight," MAC chairperson Nabil Sultan told CBC News.

Sultan said the revocation of MAC's charitable status would jeopardize services the organization provides to more than 150,000 Canadians who attend schools, mosques and community centres in its network.

"We want to see an audit that is not discriminatory and we want to be treated like any other religious charity in this country," he added.

The charter challenge could test the federal government's recent pledge to address systemic discrimination and Islamophobia within the public service.

"There's no question that there is work to be done within government to dismantle systemic racism and Islamophobia," Prime Minister Justin Trudeau said in July 2021 at the National Summit on Islamophobia.

"From the Canada Revenue Agency to security agencies, institutions should support people, not target them."

CRA audit unfounded, charity argues

MAC describes the CRA audit of its finances as clear evidence of widespread systemic bias against Muslim-led charities.

The organization said the audit has pursued unfounded suspicions and claims of wrongdoing that likely would not be applied to charities connected to other religions.

Lawyer Geoff Hall, who is representing MAC in its challenge, said the CRA has levelled unsubstantiated allegations against the charity which include "innuendo" about improper foreign ties and questions about the charitable benefits of its youth programs.

He said CRA auditors also have raised concerns about events to celebrate Eid — the holiday marking the end of Ramadan — by arguing that the events are social in nature, rather than religious.

"Imagine for a moment if a Christian organization was told by the CRA that its Christmas parties weren't Christian enough," Hall said.

Hall said he plans to argue that the CRA audit violates sections two and 15 of the Charter of Rights and Freedoms, which guarantee the right to religious freedom and equality under the law, respectively.

Hall predicted it will be months before the case is heard in Ontario Superior Court, in part because of the complexity of the challenge.

Islamophobia in government

A 2021 report by the University of Toronto's Institute of Islamic Studies found that Muslim charities are disproportionately targeted for audits by the CRA.

The report identified structural biases that may be influencing the CRA audit process. They include the belief that Muslims are somehow "inherently foreign or outsider" and a reluctance to accept non-Christian activities as legitimately religious.

The federal government has pledged to address those concerns.

In July 2021, Minister of National Revenue Diane Lebouthillier asked the Office of the Taxpayers' Ombudsperson to "examine concerns raised by certain Muslim-led charities and engage other charitable organizations led by racialized communities about their experiences with the CRA."

Sultan said that while he hopes the government will deliver on its promised reform, the threat posed by the audit has to be addressed as soon as possible.

"The Muslim community has been loud and clear with the government that there is a problem, that there is prejudice and discrimination against Muslims in government institutions, and that we expect the government to act," Sultan said.