Rebel News not eligible for journalism tax credits, Federal Court rules

A Federal Court judge has upheld the federal government's decision that far-right media outlet Rebel News doesn't qualify for journalism tax credits because it doesn't produce enough original news content.

The decision is the latest instalment in a long-running battle between Rebel News and the federal government. The outlet applied in May 2021 to be designated a "qualified Canadian journalism organization," but was rejected by the Canada Revenue Agency (CRA), which found that less than one per cent of its content was original news.

The designation allows news outlets to claim a refundable tax credit on the salaries of newsroom employees — a measure introduced by the Liberal government in 2019 to bolster the country's struggling media industry. It also allows subscribers to claim the digital news subscription tax credit.

According to the Income Tax Act, eligible organizations must be "engaged in the production of original news content." In February 2022, the revenue agency found Rebel News didn't meet that standard, as its content largely promoted one perspective.

Rebel News asked for a reconsideration of the decision, and in response to a CRA request, identified a three-week period to be reviewed for original content. The outlet selected the period between Jan. 30 and Feb. 19, 2022, which is when a trucker convoy occupied downtown Ottawa demanding an end to COVID-19 restrictions.

In March 2023, the agency upheld its original decision.

The media outlet then sought a judicial review in Federal Court, but in a decision Wednesday, Justice Ann Marie McDonald found the revenue agency's decision was "justified, transparent and intelligible."

Her ruling notes that the agency assessed 423 news reports from Rebel News published during the three-week period and found that only 10 were original news items.

Of the rest, "283 of the items were not based on facts, nor were multiple perspectives actively pursued, researched, analyzed, or explained by a journalist for the organization," the judge wrote. "A further 135 of the news items were identified as being curated content or material rewritten from other sources."

Rebel News also argued that the qualified journalism designation violates the principles of a free press, suggesting that the designation forces media companies to become "reliant on and incentivized by government to conform to their standards," according to the decision.

But McDonald rejected that argument, finding that the media outlet failed to "explain or offer any evidence on how the refusal of status to allow it to receive tax credits impedes its ability to work or impedes its freedom of the press."

Rebel News and its lawyers did not immediately respond to requests for comment. But in a post from June, founder Ezra Levant said that "nothing less than the future of independent journalism in Canada" was at stake in the legal battle.

Last fall, the federal government announced it would temporarily increase the Canadian journalism labour tax credit rate from 25 to 35 per cent, and would increase the cap on eligible salaries from $55,000 to $85,000.

Media outlets with the designation are also eligible for part of the $100 million that Google has promised to pay Canadian news publishers annually. However, other outlets may also qualify for that funding if they meet criteria set out in the Online News Act.

Earlier this year, Google put out an open call to news organizations that wish to receive compensation under the Online News Act, and about 1,500 outlets applied for the cash. Rebel News did not put its name on that list.