NOT FOR PROFIT & CHARITY REPORTING

Canadian charities and not-for-profit agencies provide much needed service to our communities. Thousands of Canadians volunteer their time to help these organizations run. Many have professional staff that perform services to a broad range of clients. But big or small, all NPO’s and charities have to produce financial statements and fulfill various statutory filings with the Canada Revenue Agency.

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Canadian Charitable Organizations

Among the requirements charities must meet are:

• Register to obtain and maintain charitable status
• Issue donation receipts
• Register to collect GST/HST – if engaged in providing taxable supplies or services, as defined
• Engage in activities that are deemed charitable (only)
• Keep proper books and records, to ensure that annual spending requirements are met and to be able to properly report all activities
• File an annual information return (T3010) with the Canada Revenue Agency
• Issue information slips such as T4s, T4S and T5s

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Defining a Not For Profit Organization

Canada Revenue Agency defines a non-profit organization (NPO) as a club, society or association that is organized and operated solely for:

• Social welfare
• Civic involvement
• Pleasure or recreation
• Any other purpose except profit

If an NPO carries on any of the above activities, and does not distribute any of its income to any member, it may be exempt from paying income tax. An NPO must be careful to ensure that its activities are not considered to be ‘for profit’ in order to retain its non-taxable status. It must also be careful to not accumulate excess cash or assets that are not required to maintain the organization.

Some of the requirements NPOs must meet, depending on its circumstances, are:

• If an NPO is a corporation, or if demanded by the Minister it must file a T2 corporation income tax return
• If an NPO is involved primarily in dining, recreational or sporting activities for its members, and has income from property in excess of $2,000, it may have to file a T3 Trust Income Tax and Information return, and pay tax on its property income.
• An NPO will be required to file a T1044 Non-Profit Organization Information Return if:
• It receives more than $10,000 in investment or royalty income
• The total assets are more than $200,000
• It filed an NPO return in the past
• An NPO will also be required to file T4’s for salaries and wages paid, and file any other returns as required under the Income Tax Act, the same as other organizations would.