On August 15, 2025, the Federal Department of Finance released draft legislation enhancing the reporting requirements for non-profit organizations (“NPOs”). 

First announced in the 2024 Fall Economic Statement, these measures aim to increase transparency across the sector and will, if passed, require virtually all NPOs to file an information return annually with the Canada Revenue Agency (“CRA”).

With a short consultation window open until September 12, 2025, it is important for NPOs and sector stakeholders to understand the scope of the proposed changes and prepare for their potential impact.

We encourage readers to review the draft legislation and news release.

Below, we have summarized the key elements of the draft legislation and what they mean for NPOs.

Why the draft legislation matters for NPOs

Under paragraph 149(1)(l) of Canada’s Income Tax Act (the “Act”), organizations that qualify as NPOs are exempt from income tax. Unlike registered charities, NPOs cannot issue tax receipts for donations, but they still benefit from this exemption so long as they are organized and operated exclusively for purposes other than profit. The draft legislation targets this group by introducing new reporting obligations designed to increase transparency across the sector.

NPO information returns

Currently, in addition to the T2 Corporation Income Tax Return (for NPOs that are incorporated), certain NPOs are required to file an annual information return called the T1044 Non-Profit Organization (NPO) Information Return (“T1044”).

An NPO is required to file a T1044 no later than six months after the end of its fiscal period, only if:

  • the total of all of the NPO’s passive income in the fiscal period exceeds $10,000;
  • the NPO’s total assets at the end of the preceding fiscal period exceeded $200,000; or
  • an information return was required to be filed by the NPO for a preceding fiscal period.

If an NPO falls into one or more of the three categories above, the NPO must report the following information on its T1044:

  • amounts received during the fiscal period;
  • a statement of assets and liabilities at the end of the fiscal period;
  • remuneration;
  • a brief description of the NPO’s activities (including whether any activities were carried on outside of Canada); and
  • the location of the NPO’s books and records.

The T1044 must be certified by an authorized officer.

What’s changing for NPO information returns

The draft legislation proposes amendments to the Act that would require:

  1. NPOs with total gross revenues over $50,000 to also file the annual T1044; and
  2. NPOs that do not meet the thresholds for filing the T1044 to file a new, short-form return that contains basic information about the organization, including:

a. its business number or trust number;

b. the name of the organization and its mailing address;

c. the names and addresses of the directors, officers, trustees or similar officials;

d. a description of the organization’s activities, including whether it conducts activities outside Canada;

e. the organization’s total assets and liabilities and annual revenues; and

f. other prescribed information.

Should it pass, the draft legislation would result in a greater number of NPOs being required to file a T1044 with the CRA detailing their activities and finances—where many NPOs did not have to do so previously. It would also require effectively all organizations claiming a tax exemption under paragraph 149(1)(l) of the Act to file some sort of information return, annually, with the CRA. 

Comment period and effective date

The legislation is currently in draft form and the Department of Finance has invited all interested Canadians and stakeholders to provide feedback on these draft legislative proposals by September 12, 2025. 

If passed, these new measures would apply to the 2026 and subsequent taxation years.

Key takeaways for NPOs

  • If the draft legislation passes:
    • All NPOs will face a filing requirement – either a full T1044 return or a new short-form return;
    • Incorporated NPOs will still be required to file the T2 Corporation Income Tax Return;
    • Thresholds will change – organizations with over $50,000 in gross annual revenues will need to file the annual T1044 information return; and
    • Smaller NPOs won’t be exempt – even those under the thresholds will need to file a new short-form return with basic information.
  • Deadline approaching: stakeholders can comment on the draft legislation until September 12, 2025.
  • Effective date: changes would apply to the 2026 taxation year and onward.

It is likely that these new provisions are another initiative of the Department of Finance in its attempt to ensure that Canadians are not avoiding the payment of tax and that Canada cannot be criticized for failure to have regulations that assist the government in its effort to prevent money laundering and terrorist financing taking place. Requiring all NPOs to file returns will help fill the transparency and information gap that currently exists.

Should you have any questions about the draft legislation’s enhanced reporting requirements for NPOs, please reach out to a member of Miller Thomson’s Charities and Not-For-Profit Group and we would be pleased to assist.