Registered Charities FAQs

Registered Charities - Frequently Asked Questions

This area of our site is devoted to Frequently Asked Questions about Registered Charities. You will find a detailed and up-to-date catalogue of commonly asked questions and answers, with additional links for more information.

If you have a question that you don't see answered here, please send an e-mail to [email protected] and we will do our best to respond as soon as possible.

  1. The Basics
  2. Becoming a Registered Charity
  3. Canada Not-for-Profit Act (CNCA)
  4. Disbursement Quota
  5. Faith-Based

RC18. What are the consequences of not meeting the obligations of a registered charity?

RC18. What are the consequences of not meeting the obligations of a registered charity?


Short Answer

If a registered charity does not meet its obligations, it may be subject to a penalty or revocation (that is, lose its charitable status).

Long Answer

The Charities Directorate of the CRA uses a scale to determine whether a charity is meeting its obligations. In increasing severity, the Charities Directorate may use the following tools:

  • education (explaining the rules to a charity)
  • compliance agreements (a formal document signed by the charity and the CRA identifying the problem, the solution, and the consequences if the charity does not solve the problem)
  • sanctions
    • financial penalty
    • suspension of the charity’s right to issue official donation receipts (for example, for one year)
  • revocation
More…

Study the
Guidelines for applying the new sanctions

 

RC19. What would stop an organization from being registered as a charity?

RC19. What would stop an organization from being registered as a charity?

The factors that prevent organizations from being registered as a charity are:

  • not resident of Canada
  • not established solely for charitable purposes
  • not devoting all its resources to charitable activities
  • giving gifts to organizations that are not qualified donees (that is, other registered charities)
  • providing personal benefits directly or indirectly to members, shareholders, directors, and/or trustees. This does not include benefits to such persons who are legitimate recipients of a charitable program.
  • private benevolence, that is providing benefit to a particular individual or private group
  • political purposes, that is, furthering the interest of a political party or candidate for public office, or retaining or changing the laws of any level of government in Canada or in foreign countries
  • commercial purposes with the intent to make a profit
  • activities that are illegal or contrary to Canadian public policy
More…

Detailed information on
Factors that will prevent an organization from being registered as a charity

 

RC20. Does CRA have an established application review process

== en ==

RC20. Does CRA have an established application review process.

Yes. CRA has recently (June 2011) updated its procedures for reviewing applications for charitable registrations.

For more detailed information see:

Canada Revenue Agency - Application Review Process

 

Becoming a Registered Charity

Faith-Based|Les organismes de bienfaisance confessionnels

==en==

Faith-Based

FB1. Our church would like to buy a parish house for our minister to use as a residence for him and his family. Can we do that?

FB2. Are there rules about who qualifies as “clergy”?

FB3. I want to give a cash donation to our church mission so that my daughter can participate in an overseas mission. Will I be able to get a tax receipt from the church?

FB4. What if some volunteers take a side trip for a holiday while they are on a mission in a foreign country?

FB5. Can our church carry on a business to generate more resources to carry out our charitable work?

FB6. Our church, which is a registered charity, would like to start a shop to sell prayer books and religious objects in our church hall. Merchandise would be sold at cost, by staff hired to run the shop. Is it permissible for our church to carry on this type of activity on church premises?

FB7. Is it permissible for our church to charge participants fees in programs that we offer?

FB8. Can a church that is a registered charity take advantage of an under- used asset to generate some additional revenue?

FB9. Our church is applying to the Canada Revenue Agency for status as a registered charity. We know that this means that our church’s purposes must be exclusively and legally charitable, and that it must be established for the benefit of the public or a sufficient segment of the public. However, the Board is not sure what exactly is meant by “public benefit”?

FB10. What does the CRA mean by “the public”, and a “sufficient segment of the public”?

FB11. Does this mean that our church cannot focus its charitable activities on members of its own congregation?

FB12. How can we make sure that the charitable activities our church wants to undertake will meet the criteria of the CRA with regard to public benefit?

FB13. We have heard that religious societies are exempt from filing T3010 annual returns with the Canada Revenue Agency. Is that true?

FB14. Can a church set up a fund to help people in distress in our community?

FB15. If our church is successful in raising money to help this family, can the church give the money that is raised directly to the family?

==fr==

Les organismes de bienfaisance confessionnels

OC1. Notre église aimerait acheter une maison paroissiale pour que notre ministre du culte l’utilise comme sa résidence pour lui et sa famille. Pouvons-nous faire cela?

OC2. Existe-t-il des règles à propos de ce qui caractérise un « membre du clergé »?

OC3. Je veux faire un don en espèces à la mission de notre église afin que ma fille puisse participer à une mission outremer. Pourrai-je obtenir un reçu aux fins de l’impôt de l’église?

OC4. Que se passe-t-il si des bénévoles font un voyage secondaire de villégiature pendant qu’ils sont en mission dans un pays étranger?

OC5. Notre église peut-elle exercer une activité commerciale pour générer plus de ressources afin d’exercer nos activités de bienfaisance?

OC6. Notre église, qui est un organisme de bienfaisance enregistré, aimerait lancer une boutique de vente de livres de prière et d’objets religieux dans notre salle paroissiale. La marchandise serait vendue au prix coûtant par du personnel embauché pour exploiter la boutique. Notre église a-t-elle le droit d’exercer ce type d’activité sur les lieux de l’église?

OC7. Notre église a-t-elle le droit de faire payer aux participants des frais dans le cadre des programmes que nous offrons?

OC8. Une église qui est un organisme de bienfaisance enregistré peut-elle profiter d’un bien sous-utilisé pour générer des revenus supplémentaires?

OC9. Notre église fait une demande de statut d’organisme de bienfaisance enregistré auprès de l’Agence du revenu du Canada. Nous savons que cela signifie que les fins de notre église doivent être exclusivement et légalement caritatives, et qu’elles doivent être établies pour l’avantage du public ou d’une portion suffisante du public. Toutefois, le conseil d’administration n’est pas certain de ce qu’on entend exactement par « avantage public »?

OC10. Qu’entend l’ARC par « le public » et une « composante suffisante du public »? Cela signifie-t-il que l’église ne peut pas axer ses activités de bienfaisance sur les membres de sa propre congrégation?

OC11. Cela signifie-t-il que notre église ne peut pas concentrer ses activités de bienfaisance sur les membres de sa propre congrégation?

OC12. Comment pouvons-nous nous assurer que les activités de bienfaisance que notre église veut entreprendre respecteront les critères de l’ARC à l’égard de l’avantage public?

OC13. Nous avons entendu dire que des sociétés religieuses sont dispensées de produire les déclarations annuelles T3010 à l’Agence du revenu du Canada. Est-ce exact?

OC14. Une église peut-elle créer un fonds pour aider les gens en détresse dans notre collectivité?

OC15. Si notre église réussit à recueillir de l’argent pour aider cette famille, l’église peut-elle donner directement à la famille l’argent recueilli?

English

RC1. Is my organization a registered charity?

RC1. Is my organization a registered charity?


A “registered charity” is a technical and precise term referring to a charitable organization that is registered under the Income Tax Act (ITA). In order for your organization to be a registered charity, you must have applied for charitable status with the Charities Directorate of the Canada Revenue Agency (CRA).

Municipal, provincial (territorial), federal, and specific commissions and other bodies define the terms “charity” and “charitable” in various ways. Just because your organization is referred to as a “charity” or because you do “charitable” work (that is, helping those in need and not taking any profit) does not necessarily mean that your organization is a registered charity under the ITA.

Your organization can become a registered charity by applying for charitable status with the CRA. Detailed requirements are set out in the rules of the ITA. The process begins by sending in a completed T2050 form. When the process is complete, the federal government provides you with a charities registration number.(See FAQ RC4)

Don’t confuse a charities registration number with a fundraising registration number (issued by the province, territory, or municipality) or a corporate number (issued upon registration as a corporation).

More...

  • To find out if your organization is a registered charity, go to FAQ RC5
  • For information on how to become a registered charity, go to FAQ RC16

RC2. My organization is a “non-profit”. Is it a registered charity?

RC2. My organization is a “non-profit”. Is it a registered charity?


Short Answer

Not necessarily.

A non-profit organization can be set up for any legal purpose as long as its members do not receive a direct financial benefit from the revenues or assets of the organization. A non-profit can operate fully without registering as a registered charity with the Canada Revenue Agency (CRA).

A registered charity, on the other hand, is a technical and precise term that refers to an organization that

  • is established exclusively for charitable purposes
  • uses its resources (personnel, funds, and property) for charitable activities
  • does not operate for profit
  • has applied and is registered as a charity under the Income Tax Act (ITA)
  • has received a Notice of Registration from the CRA
  • has been assigned a charitable registration number (See FAQ RC4) by the CRA
More…

For further explanation of the differences between a registered charity and a non-profit organization, go to our Fast Fact on Registered Charity vs. Non-profit Organization

RC3. My organization engages in “charitable” causes in our province. Does that mean that it is a registered charity?

RC3. My organization engages in “charitable” causes in our province. Does that mean that it is a registered charity?


Short Answer

Not necessarily. Just because an organization uses the word “charitable” to describe itself and what it does, the organization is not necessarily a registered charity. An organization can run on a not-for-profit basis without registering as a registered charity with the Canada Revenue Agency (CRA). A “registered charity” is a technical and precise term referring to a charitable organization that is registered under the Income Tax Act (ITA).

Long Answer

Municipal, provincial (territorial), federal, and specific commissions and other bodies define the terms “charity” and “charitable” in various ways. Often, these definitions are not linked to the concept of a registered charity under the ITA.

  • In Alberta, an organization that wishes to promote “charitable” purposes can incorporate under either the Companies Act or the Societies Act. Neither of these acts defines the term “charitable” and neither of them links the term to the concept of a registered charity under the ITA. In addition, any organization that wishes to raise funds over $25,000 must register with the provincial government as a “charitable organization” under the Charitable Fund-Raising Act. This applies to both registered charities and non-profits in general. So, if you are a “charitable organization” in Alberta, that does not necessarily mean that you are also a registered charity under the ITA. This lack of a link between the provincial concept of “charity” and ”charitable” and the concept of a registered charity under the ITA can also be found in British Columbia, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, and Newfoundland and Labrador.
  • In Prince Edward Island, the Charities Act, which defines a “charity” as any organization seeking financial support in order to raise funds for “charitable” purposes, applies to non-profits other than organizations that are registered charities under the ITA.
  • In Saskatchewan both the Charitable Fund-Raising Businesses Act andthe Non-Profit Corporations Act refer to “charitable” corporations and “charitable” organizations as corporations and organizations that are registered charities within the meaning of the ITA.

As you can see, most provincial legislations use the terms “charity” and “charitable” to refer to non-profit work in general and charitable works at an informal level. This does not mean that your organization is a registered charity for the purposes of the ITA and the CRA.

More…

For further explanation of the differences between a registered charity and a non-profit organization, go to our Fast Facts

For information on how to become a registered charity, go to FAQ RC16

RC4. What is a charitable registration number?

RC4. What is a charitable registration number?


Short Answer

A charitable registration number is a number assigned by the Canada Revenue Agency (CRA) to a registered charity.

Long Answer

A charitable registration number has 12 digits and 2 letters. It consists of

  • your nine-digit business number (this number is unique and does not change no matter how many or what type of CRA accounts you have)
  • the two letters RR identify your account as a registered charity
  • 0001 is the reference number used to distinguish between internal divisions with the same program accounts.

Example

987654321RR0001 is an example of a charitable registration number

RC5. How can I find out if my organization is a registered charity?

RC5. How can I find out if my organization is a registered charity?

You can

  • call the Charities Directorate of the Canada Revenue Agency at 1-800-267-2384 (English) or 1-888-892-5667 (bilingual) and speak to an agent

    or

  • search the CRA's Charity Registry.

 

You may also be able to find this information

  • in your organization’s Minute Book (the book that contains your organization’s incorporation documents)
  • on your organization’s tax returns
  • on your Notice of Registration from the CRA
  • from your organization’s lawyer

RC12. Why would an organization register as a charity with the CRA? What are the advantages?

RC12. Why would an organization register as a charity with the CRA? What are the advantages?


A registered charity has considerable advantages under Canadian income tax law.

A registered charity

  • is exempt from income tax
  • is able to issue official donation receipts. Individual donors use these receipts to reduce the income tax they would otherwise have to pay, while corporate donors use them to reduce their taxable income. This, in turn, may result in more gifts to the charity.
  • enjoys a favourable position under other federal taxes such as the Goods and Services Tax
  • can receive money from foundations and other charities because the organization is officially recognized as a “qualified donee”.(see FAQ R23)
  • can have increased credibility in the community because the public knows that the charity has to follow rules in order to have charitable status.
  • can get publicity on websites and listings of charities in Canada.
More...

T4063 Registering a Charity for Income Tax Purposes Guide

T2050 Application to Register a Charity Under the Income Tax Act Form

RC13. What are the responsibilities of a registered charity?

RC13. What are the responsibilities of a registered charity?


Short answer

In return for the advantages of being a registered charity, a charity must follow certain rules.

There are three general categories of responsibility:

1. A registered charity can only do a limited range of things. It can advance religion, relieve poverty, carry out education, or undertake programs and activities of benefit to the community that the law considers charitable.

2. It must follow detailed rules under the Income Tax Act (ITA) for spending money, receiving income, and reporting.

3. It cannot engage in a range of activities that the law considers political.

Long answer

As part of its responsibilities, a registered charity must:

  • ensure that all its activities are charitable and within its objects
  • demonstrate that it is devoting its resources to its stated charitable purposes
  • keep accurate, detailed and complete records, books and receipts
  • ensure that it does not pay, or otherwise make available, its income to any of its members
  • ensure that at least 50 per cent of its directors are at arm’s length (that is, not in a close relationship) with each other. (Excepting private foundations )
  • meet its spending requirement (disbursement quota)
  • ensure the accuracy of all official donation receipts and ensure that all such receipts are in accordance with the ITA and its regulations
  • file a yearly T3010 Information Return on time (within six months of the organization’s fiscal year-end)
  • engage only in permitted political activity. A charity cannot
    • engage in any political activities to support or oppose a political party or a candidate;
    • try to influence public opinion on a broad social question; or
    • advocate for a change in law or policy.

    However, a charity can spend up to 10 per cent of its resources on non-partisan political activities that help to accomplish the charity’s purpose. All political activity must also be ancillary and incidental to the objects of the charity.

  • not make any changes to its constitution without the approval of the Canada Revenue Agency (CRA)
  • allow the CRA to audit its books and activities, if asked
    and
  • carry out all other obligations under the ITA.

These responsibilities are to be taken very seriously, as any violation could result in public embarrassment, the loss of reputation, and a range of sanctions by the CRA (such as financial penalties, the loss of privileges until corrective action is taken, or ultimately the revocation of charitable status). If an organization’s charitable status is revoked, it can no longer issue tax receipts for donations and will no longer be a qualified donee.

RC14. Is there only one kind of “registered charity”?

RC14. Is there only one kind of “registered charity”?


Short answer

No. There are three types of registered charities under the Income Tax Act: charitable organizations, public foundations, and private foundations. This designation is issued by the CRA at the time of registration. Different rules apply to each type.

Long answer

A registered charity is designated as a charitable organization if:

  • it devotes its resources mainly to charitable activities carried on by itself
  • more than 50 per cent of its directors, trustees, officers, or similar officials deal with each other and with each of the other directors and/or trustees at arm’s length
    and
  • in general (there are some exceptions), not more than 50 per cent of the funds that the charity has received have come from one person or organization or from a group of people or organizations that do not deal with each other at arm’s length.

A registered charity is a public foundation if:

  • it is constituted and operated exclusively for charitable purposes
  • it is a corporation or a trust
    and
  • it gives more than 50 per cent of its income annually to qualified donees.

A registered charity is a private foundation if:

  • it is constituted and operated exclusively for charitable purposes
  • it is a corporation or trust
    and
  • it is not a charitable organization or a public foundation.

Generally, charitable organizations focus on carrying out charitable activities, while public foundations focus on raising funds to support operating charities. An entity is designated as a private foundation rather than a charitable organization or a public foundation because those who fund or control it are not necessarily operating at arm’s length.

RC15. What rules govern registered charities?

RC15. What rules govern registered charities?

A registered charity is permitted to do only certain kinds of activities:

  • advance religion
  • advance education
  • relieve poverty
    and
  • undertake activities which are generally beneficial to the community as a whole and which the courts have determined to be charitable.

Other rules pertaining to registered charities include that:

  • it must devote its resources to charitable purposes and activities
  • it cannot pay, or otherwise make available, its income to any of its members
  • it must issue official donation receipts in accordance with the Income Tax Act and the Income Tax Regulations (and an organization that is not a registered charity may not issue official receipts)
  • it is required to keep proper books and records, and provide these and other relevant information to the CRA
  • each year, the charity must file an annual information return
    and
  • each year, the charity must spend its “disbursement quota” (spending requirement). Generally speaking the disbursement quota is the minimum amount a registered charity is required to spend each year on its own charitable activities, or on gifts to qualified donees (for example, other registered charities). The disbursement quota calculation is based on the value of a charity's property not used for charitable activities or administration.
Notice to the reader:
As a result of Budget 2010, the information stated above regarding disbursement quota applies only for fiscal periods ending on or after March 4, 2010. If the charity's fiscal period end was before March 4, 2010, see Disbursement quota calculation - prior to Budget 2010.
More…

For a checklist read
Basic Guidelines for Maintaining Charitable Registration

RC16. How can my organization register as a charity?

RC16. How can my organization register as a charity?


Short Answer

In order to qualify as a registered charity under the Income Tax Act with the Charities Directorate of the Canada Revenue Agency (CRA), your organization has to

  • be resident in Canada
  • be established and operated exclusively for charitable purposes that are within the four categories of charity identified by the courts
  • devote all its resources (financial, personnel, and property) to charitable activities

If these conditions are met, you apply by sending in form T2050 Application to Register a Charity with the required information following the instructions in Guide T4063, Registering a Charity for Income Tax Purposes.

Long Answer

In considering registration, an organization has to review its governing document that describes its purposes (objects). The purpose of an organization is the why and the what (end results) of its existence. These purposes have to be within the four categories identified by the courts:

  • to relieve poverty
  • to advance education
  • to advance religion
  • other purposes beneficial to the community that the courts have found to be charitable.

If your organization’s purposes do not fall within the four categories, it cannot be registered unless you change its purpose. If it is provincially incorporated, changes have to be filed with the provincial regulatory body.

If the organization does not have a governing document, it will need to draft one. The CRA has a list of model objects that would be acceptable.

Key information that an application for charitable status must include

  • the name and address of the organization
  • the signature of two persons who are authorized to sign on behalf of the organization
  • a statement of each of the organization’s purposes listed in the governing document and the activities to accomplish each purpose. The activities must be specific in order to clearly state what the organization intends to do.
  • an explanation of how the organization will make decisions
  • an estimate of the organization’s income and expenses (financial statements)
  • a governing document that describes the organization’s purposes (also called objects). A governing document is a deed of trust, a constitution, or articles of incorporation (a not-for-profit organization that is incorporated under provincial, territorial, or federal law). This includes bylaws, a current list of directors, trustees, or other similar officials who make up the charity’s elected or appointed governing body with their full names, addresses, and occupations.
  • The organization’s bylaws need to contain a clause stating that if the registered charity is dissolved, its remaining asset will be given to a qualified donee.
  • information on fundraising activities, keeping in mind that fundraising activities cannot be the main object of a registered charity
  • information on political activities. The charity is allowed to spend 10 per cent of its resources on non-partisan political activities to influence law, policy, and public opinion on matters related to its charitable purposes.
  • a certificate of good standing. The name of this certificate varies from province to province. The incorporating authority issues this to certify that the organization is duly incorporated and is in good standing with the authority.
More…

Additional information on completing the application form can be found at

SEE ALSO: Thinking of Becoming a Registered Charity: Tools to Help published by the Legal Resource Centre and Charity Central.

RC6. Our charity wants to change to some new activities. Can we do this?

RC6. Our charity wants to change to some new activities. Can we do this?


Short answer

Perhaps. First, a charity wishing to start new programs or activities should make sure that the new activities are in step with its objects. Then, it should consult the Charities Directorate of the Canada Revenue Agency (CRA) to check that the new program or activity is charitable and falls within the scope of the charity’s approved purposes (objects).

Long answer

Your charity should send the Charities Directorate a detailed description of the proposed program or activity, as well as any related promotional material (brochures, posters, or newsletters).

In some cases, a charity may have to alter its purpose so that it has a basis for taking on the new activities. If this is the case, after the charity has amended its purposes, it has to send the revised governing documents to the Charities Directorate. Detailed information on the process of changing a charity’s purposes can be found at Changing a Charity's Purposes

More…

For more information, see the CRA’s explanation of
Changing a Charity’s Activities

RC7. Can our charity lend its registration number to another organization?

RC7. Can our charity lend its registration number to another organization?


Short answer

No! Under no circumstances should your registration number be loaned to another organization.

Long answer

A charity is responsible for all tax receipts issued under its name and number and must account for the corresponding donations on its annual information return.

Lending the registration number to another organization could lead to the revocation of your charity’s registered status.

RC8. We’ve accomplished our goals! How can our charity wrap up its operations?

RC8. We’ve accomplished our goals! How can our charity wrap up its operations?


Short answer

Congratulations! You should begin by requesting revocation of your registered status from the Charities Directorate of the Canada Revenue Agency.

Once your charity’s status is revoked,

  • you can no longer issue official donation receipts
  • you are no longer exempt from income tax
  • you must transfer your remaining assets to eligible donees.
More…

If your charity is considering merging, amalgamating, or consolidating with another organization, you should consult with the Charities Directorate at 1-800-267-2384 (English) or 1-888-892-5667 (bilingual) before doing so.

RC9. How can I talk to someone at the Charities Directorate of the Canada Revenue Agency?

RC9. How can I talk to someone at the Charities Directorate of the Canada Revenue Agency?

For enquiries about registered charities, telephone:

  • in the Ottawa area 613-954-0410 (English) or 613-954-6215 (bilingual)
  • toll free from anywhere else in Canada 1-800-267-2384 (English) or 1-888-892-5667 (bilingual).

 

RC17. How can I find out about the status of my application?

RC17. How can I find out about the status of my application?

After sending in your complete application, if you are an authorized representative of the charity and are identified on the application form, you can call the CRA’s toll-free line at 1-800-267-2384 (English) or 1-888-892-5667 (bilingual) to inquire about the status of your application.

 

RC10. How can a registered charity carry out its charitable purpose?

RC10. How can a registered charity carry out its charitable purpose?

A registered charity can make grants or gifts to other qualified donees or it can carry out its own activities or purposes as set out in its incorporation documents.