In Rebel News Network Ltd. v. Canada (Attorney General), 2024 FC 1468, released on Sept. 18, Justice Ann Marie McDonald held that the Canada Revenue Agency (CRA) had justified its decision denying Rebel News “qualified Canadian journalism organization” (QCJO) status through an analysis of Rebel News’s content.
Founder, president and chairperson of Rebel, Ezra Levant, told Law360 Canada that Rebel News intended to appeal the decision and said that the “QCJO news licensing scheme” is an unconstitutional infringement on freedom of the press.
“It is anathema to a free press to have a government committee determine who is or isn’t a journalist, especially when their decision results in punishments or benefits to the journalists,” he said.
In 2019, the federal government introduced a 25 per cent refundable labour tax credit for salary or wages paid to newsroom employees of QCJOs. In 2023, the federal government announced it would temporarily increase the Canadian journalism labour tax credit rate from 25 per cent to 35 per cent.
Rebel News Network Ltd. applied for QCJO status in May 2021. A CRA determination officer rejected Rebel’s application, finding that less than one per cent of the items produced by Rebel were original news content under subparagraph 248(1)(a)(v) of the Income Tax Act.
The relevant provision of the Act provides that a QCJO must be engaged in the production of original news content, primarily focused on matters of general interest and reports of current events, including coverage of democratic institutions and processes.
In interpreting “original news content” the CRA takes into account its Guidance on the income tax measures to support journalism.
Section 2.27 of the Guidance provides that original news content generally refers to reports, features, investigations, profiles, interviews, analyses or commentaries that are, among other things, based on facts and multiple perspectives produced in accordance with journalistic processes and principles.
In its letter denying the QCJO designation to Rebel News, the CRA stated that it had consulted an independent advisory board on whether Rebel News satisfies the requirements to be classified as a QCJO under the Act
The CRA noted that the advisory board had assessed that Rebel News does not produce original news content, “on the basis that the content was found to be largely opinion-based and focused on the promotion of one particular perspective.”
Rebel requested a reconsideration of the decision and the CRA requested that Rebel identify a consecutive three-week period of digital content for each news-related website to be reviewed for the assessment of original news content.
Rebel provided a three-week period from Jan. 30 to Feb. 19, 2022, as a period for review. In a release, Levant stated that this period included the busiest time in the publication’s history during the trucker protests, in which Rebel News was publishing “up to 20 stories a day” almost entirely from protest locations, including Ottawa, Windsor and Coutts, Ont.
In November 2022, a second CRA determination officer reviewed additional submissions from Rebel, including news content from the submitted period. The officer found that only two per cent of the items produced by Rebel during the relevant period constituted original news content.
The advisory board reviewed the second CRA Determination Officer’s reconsideration, and stated that Rebel had taken on an “activist” role, noting the fact that its founder and reporters had appealed directly and repeatedly to the audience to contribute to a legal fund created by Rebel.
The advisory board determined that crowdfunding requests for legal fees were contrary to the Guidelines and the Act and also concluded that Rebel did not follow journalistic processes and principles.
The CRA concluded that the majority of Rebel News’s content is not based on facts and multiple perspectives that are analyzed and explained by a journalist for Rebel News in accordance with s. 2.27(c) of the Guidance and found that the original decision denying QCJO status to Rebel should stand.
Rebel challenged the decision arguing that the CRA interpreted “original news content” in a manner that was not consistent with the purpose and intent of the Act or the CRA’s Guidance on the income tax measures to support journalism.
Justice McDonald noted that the presumption of reasonableness applies to an administrative decision-maker’s interpretation of their enabling statute.
The judge cited Mason v. Canada (Citizenship and Immigration), 2023 SCC 21, 2023 CSC 21, in which the Supreme Court of Canada noted that an administrative decision-maker may draw on its institutional expertise and experience and rely on considerations that a court would not have thought to employ, in interpreting a statute.
“Thus, deference is owed to the CRA in its interpretation of paragraph 248(1)(v) of the Act, which is informed in part by the Guidance,” wrote Justice McDonald
She noted that the CRA decision found that Rebel was not engaged in the production of original news content and concluded, among other things, that Rebel did not demonstrate consistent, intentional production of content that could be considered original news content.
The judge held that the CRA had justified this conclusion through its analysis of content spanning a three-week period that was selected by Rebel.
Rebel also argued that the decision was unreasonable because it was based on the advisory board’s finding that Rebel took an “activist stance.”
The court held that the CRA decision was not based solely upon the advisory board’s finding that Rebel took an “activist stance,” noting that the CRA had refused QCJO designation to Rebel on the grounds that the sample of news content was contrary to the relevant sections of the Act as informed by the Guidance.
The judge held that the decision was justified, transparent and intelligible, notwithstanding the advisory board’s noting that Rebel took an “activist stance.”
The court also rejected arguments by Rebel that the CRA failed to reasonably consider the evidence it submitted to demonstrate that it is actively engaged in the production of original news content.
Justice McDonald noted that Rebel has not identified any news reports that were overlooked.
The court also rejected arguments that subsection 248(1) of the Act violates the fundamental freedom of the press under the Charter.
Rebel argued that Canada has created a two-tiered journalism system where the government can wield influence on the viability of news organizations, access to platforms and financial aid.
It submitted that news organizations are not independent of the government but rather are reliant on and incentivized by the government to conform to its standards.
The court noted that this issue was not raised with the CRA directly and that Rebel had not offered any evidence on how the decision of the CRA impedes the freedom of the press generally, as alleged.
Justice McDonald observed that Rebel had not explained or offered any evidence on how the refusal of status to allow it to receive tax credits impeded its ability to work or impeded its freedom of the press.
In a statement on the decision, Levant expressed incredulity at the finding that only two per cent of Rebel News’s content during the review period qualified as original news content.
“We were the window on the trucker convoy for the whole world. That month, we actually had more viewers than the CBC state broadcaster gets on an average month,” he said.
Levant also told Law360 Canada that the “QCJO licensing scheme” is an “obvious recipe” for undue government influence in journalism, noting that government influence was already a problem because of government subsidies to journalists.
Charles Drouin, a spokesperson for the CRA, stated that the agency generally requires journalists to seek comments from multiple individuals or organizations affected by or witnesses to the subject matter in order for the content to be classified as original news.
“For example, content that presents a single point of view, selectively presents facts or does not provide a rebuttal opportunity for those being criticized would not be considered original news content for the purposes of QCJO designation. ‘Multiple perspectives’ does not necessarily require the presentation of ‘both sides’ of an issue or event. However, for the purposes of QCJO designation, original news content requires the presentation of more than a single point of view,” he told Law360 Canada in an email.
The CRA did not, however, respond to a query on the process it uses to assess whether news content is based on facts and multiple perspectives and whether it is produced in accordance with journalistic processes and principles.
Counsel for Rebel News were Robert Hawkes and Sarah Miller of Jensen Shawa Solomon Duguid Hawkes LLP.
Counsel for Canada were Wendy Bridges and Alex Millman of Justice Canada.
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