Ottawa mulls taxing religious institutions

Ottawa’s proposal could strip faith groups of charitable status, leaving food banks, shelters and other vital services on the chopping block

Pluralism doesn’t mean sidelining faith—yet Ottawa may soon do just that. The House of Commons Standing Committee on Finance has recommended revoking charitable status for the “advancement of religion,” according to a new Frontier Centre for Public Policy report. The proposal would strip churches, mosques, synagogues and temples of the same tax recognition given to other charities.

The Frontier Centre report, Revoking the Charitable Status for the Advancement of Religion: A Critical Assessment by Pierre Gilbert, estimates religious institutions contribute $16.5 billion annually to Canadian communities through food banks, shelters, counselling and cultural programs. By comparison, the report notes, Ottawa foregoes between only $1.7 billion and $3.2 billion in revenue each year from charitable tax exemptions for religion. That is not a subsidy—it is a fraction of the value Canadians already receive in return.

Yet because the government is running a deep deficit of its own making, the report warns, faith groups may be seen as low-hanging fruit. Instead of fixing structural overspending, Ottawa appears willing to claw money out of communities by targeting religious charities.

The financial risks extend beyond donations. The report explains that the Canada Revenue Agency’s “revocation tax” could force congregations to pay an amount equal to the market value of their buildings, bank accounts and property. For small congregations, the report says, this would likely mean insolvency. Even larger institutions such as the Salvation Army—which, according to the report, provides housing and emergency relief to millions of Canadians every year—would face crippling costs.

The report argues that revocation would undermine Section 2(a) of the Charter of Rights and Freedoms, which guarantees freedom of conscience and religion. Faith is not a private club. It is a public good that builds community, supports the vulnerable and sustains culture. Targeting it for revenue undermines not only religious institutions but also the fabric of civil society.

The BC Humanist Association, cited in the report, has argued that taxpayers should not “subsidize” religion. But the report points out that this framing is misleading. Tax recognition of charitable donations is not a subsidy—it is a recognition of public value. By that measure, religious institutions more than qualify.

The government has announced it will table Budget 2025 on Nov. 4. The Frontier Centre report suggests that the committee’s recommendations on charitable status are likely to resurface during that process.

If these measures are adopted, Canadians will lose far more than tax receipts. They will lose food banks, shelters, counselling services and community programs that government cannot replace.

Ottawa needs to stop looking at faith groups as a problem to be managed and start seeing them as partners in the public good. Canada’s fiscal crisis is self-inflicted. It must not be solved on the backs of the very institutions that, for centuries, have done the work government either could not or would not do.