Dying With Dignity Canada is losing its coveted charitable status, the first such group to be deregistered since the Canada Revenue Agency launched a series of controversial political-activity audits almost three years ago.

The small Toronto-based group said it received the bad news Friday in a letter from the CRA that said government officials made mistakes in 1982 and 2011 when they formally conferred and confirmed charitable status.

Dying With Dignity Canada bills itself as a health and education charity that, among other things, lobbies for terminally ill patients to have a choice about physician-assisted dying.

The Stephen Harper government began its special audits of charities' political activities in 2012, under an $8-million program that initially targeted environmental groups, then expanded to human rights, poverty, religious and other charities. Some 60 such groups are to be audited by 2017.

So far, only one other charity is known to be under imminent threat of losing its charitable registration.

Canada Revenue Agency

Dying With Dignity says the Canada Revenue Agency has informed the group that it never should have received charitable status in the first place, as it does not advance education in the charitable sense. (Kady O'Malley/CBC )

Montreal-based Alternatives, which funds Third World health and education projects, was told in August that officials also made an error with its initial charitable registration years ago. However, Alternatives spokesman Michel Lambert said his group is now in discussions with the CRA about ways to retain its status, allowing it to continue to issue tax receipts to donors for the time being.

Wanda Morris, CEO of Dying With Dignity, said the group accepts it will lose its charitable status and is converting to non-profit status after about Feb. 15, when the CRA ruling takes effect.

The agency's letter said the group does not conduct "any activities advancing education in the charitable sense."

Morris said the conversion to non-profit status will free it from the tangle of rules on political activities, allowing Dying With Dignity Canada "to focus on political advocacy without constraints."

The charity received about $300,000 in donations in 2013, and says it spent about $35,000 on political activities, an amount representing about nine per cent of all spending. Charities are not permitted to spend more than 10 per cent of their resources of political activities, but definitions are often unclear.

Environmental Defence also under threat

Another charity, Toronto-based Environmental Defence, is also under threat of losing its charitable status, but is currently in a formal appeal process with the CRA.

Critics have charged that the political-activities audits are politically motivated, with the Harper government especially targeting charities that oppose its energy and pipeline policies. Some have said the audits are creating a so-called advocacy chill, as some charities self-censor so as not to provoke the auditors.

But Revenue Minister Kerry-Lynne Findlay said the agency works at arm's length from the government, making its own decisions about what groups to audit without political direction.

New Democrat MP Murray Rankin, the party's critic for the Canada Revenue Agency, called the stripping of Dying With Dignity's charitable status an "outrage."

"I think this is just part of a pattern where the Conservatives have been targeting groups who they don't agree with," he said from Victoria.

"It's chosen birdwatchers in the past. It's chosen those of us fighting pipelines. The latest casualty is now Dying With Dignity, whose apparent views are different than those of the Conservatives."

Conservative MP Steven Fletcher, who supports the group's goals, said the decision to deregister was not political.

He added that the organization's changed status will likely not hurt donations.

"I think this issue is so personal and such a unique area of public policy that when people are dealing with life and death issues, they're not thinking about their tax receipt," he said in an interview.