Registered charities are conferred a variety of benefits under the Income Tax Act (Canada); the most important of which permits them to issue charitable receipts in respect of eligible donations. While the economic benefits to a donor associated with such charitable receipts can encourage donations, the associated loss of tax revenue has led the fiscal authorities to create a myriad of laws and regulations limiting the scope of activities in which charities may engage. Organizations applying to become registered charities will be subject to scrutiny from the Canada Revenue Agency (CRA) and, in certain situations, the Public Guardian and Trustee of Ontario (PGT), on receipt of an application and will be subject to continuing oversight from the CRA and PGT if their application is successful. Accordingly, directors and officers of charities and non-profit organizations considering an application to become a registered charity will need to be familiar with these rules. This session conveyed tips and insights into the application process for new organizations and non-profits, while also offering suggestions to existing registered charities to comply with their ongoing regulatory obligations.
A cautionary note
The foregoing text and video is provided for general information purposes only. It is neither intended as, nor should be considered, legal advice and readers and viewers are cautioned against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted. © McMillan LLP 2011.
Five Good Ideas
- Look before you leap. Consider whether your organization is best organized as a registered charity or a non-profit.
- Get it right the first time – Billy Joel. Carefully draft your organization’s letters patent prior to incorporating.
- Don’t miss the holidays. Appropriate selection of a corporation’s fiscal year can facilitate year-end giving.
- Choose your friends wisely. Do not put your charity’s registered status at risk by acting as a conduit.
- Look a gift horse in the mouth. Review the CRA’s policies regarding the issuance of donation receipts for non-cash gifts.
Resources
- Charities Directorate of the Canada Revenue Agency
- “Charities and Giving – What’s New” – Electronic Mailing list of the Charities Directorate. Subscribe.
- Office of the Public Guardian and Trustee (Ontario)
- Not-for-Profit Incorporator’s Handbook
- Arthur Drache et. al., Charities Taxation, Policy and Practice, looseleaf (Toronto: Thomson Canada Limited, 2007).
Andrew Stirling
Associate, McMillan LLP
Andrew Stirling is an associate in McMillan’s Tax Group. His practice concentrates on all aspects of domestic and international tax planning and income tax matters with a particular focus on mergers and acquisitions, reorganizations, corporate finance and dispute resolution. His charities and not-for-profit practice involves providing advice to charitable and not-for-profit organizations on a range of issues including the preparation and application to become a registered charity and advising such organizations on their compliance and regulatory obligations. He has also worked with registered Canadian amateur athletic associations in a similar capacity. In addition to providing advice, Andrew also represents clients in their dealings with the Canada Revenue Agency’s Charities Directorate and the Public Guardian and Trustee of Ontario. Andrew has had multiple contributions to the Current Cases feature published in the Canadian Tax Journal and was an Associate Editor of the Oxford University Commonwealth Law Journal.