National Arts Service Organizations

January 30, 2012 | Andrew Valentine

In the November issue of this Newsletter, we reported on the draft Guidance issued by the Charities Directorate concerning the registration of arts organizations.  Arts organizations should be aware that, in addition to the option of applying for registration as a charity using the normal application procedure, another option exists by which an arts organization can obtain status as a qualified donee under the Income Tax Act, which would make it tax exempt and capable of issuing donation receipts.

The Income Tax Act provides that organizations that are registered under the Act as “national arts service organizations” (NASO) are treated as registered charities that are designated as charitable organizations.  In order to be so registered, organizations must proceed through a two step process.

First, the organization must apply to the Ministry of Canadian Heritage for designation as a NASO.  In order to be eligible for this designation, it must meet three criteria:

  • It must be a non-profit organization
  • It must have as its purpose the promotion of the arts on a nation-wide basis through activities such as sponsoring arts exhibitions or performances, conducting workshops and development programs relating to the arts, or organizing and sponsoring conferences, competitions and special arts events.
  • It must demonstrate that its membership represents, in one or both official languages of Canada, the community of artists in one or more recognized sectors of the arts (including theatre, dance, opera, music, painting, sculpture, drawing, crafts, design, photography, literary arts, film, sound recording).

The applicant must also meet the other criteria applicable to registered charities designated as charitable organizations.  Specifically, more than 50% of the directors, trustees and officers of the organization must be at arm’s length with each other, and not more than 50% of the property of the organization can have been contributed by one person or members of a related group.

If the Minister of Heritage determines that the organization qualifies as a NASO, the organization must then apply to the Canada Revenue Agency for registration. As a practical matter, the Ministry of Heritage will forward the necessary documentation to CRA for consideration upon determining that the organization qualifies.  CRA will review the application to determine whether it meets certain additional requirements under the Income Tax Act.  In addition to being designated as a NASO by the Minister of Heritage, the organization must meet the following requirements:

  •  It must be resident in Canada and formed in Canada; and
  • The activities of the organization must be confined to one or more of a list of activities that includes the following:
    • promoting or conducting research into one or more art forms;
    • sponsoring arts exhibitions or performances;
    • representing the interests of the arts community or a sector thereof (but not of individuals) before government, judicial, quasi-judicial or other public bodies;
    • conducting workshops, seminars, training programs, etc., relating to the arts for members of the organization;
    • educating the public about the arts community or the sector represented by the organization;
    • organizing and sponsoring conventions, conferences, competitions, and special events related to the arts community;
    • conducting arts studies and survey of interest to members of the organization relating to the arts community;
    • acting as an information centre or maintaining a resource databases relating to the arts community.

If an organization is registered as a NASO by CRA, it is treated for income tax purposes as a registered charitable organization.  This means that it is exempt from income tax, it can issue donation receipts to donors allowing them to claim donation tax credits or deductions, and it is eligible to receive gifts from other registered charities.

Arts organizations should consider whether registration as a NASO, or registration through the normal charitable registration process, may be right for them. Miller Thomson’s Charities and Not-for-Profit lawyers can advise on and assist with either of these registration processes.


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