CRA has released two new items of interest
on its website. The first consists of a
new Guidance, CG-017,
which sets out the general requirements for charitable registration. The Guidance provides a summary of the basic
requirements under the Income Tax Act for
operating as a charity, including:
- whether the organization has
exclusively charitable purposes and activities; - whether the organization meets
the public benefit test; - whether the organization
operates according to the rules applicable to political activities by
registered charities; - whether the organization
complies with the requirements surrounding business activities by registered
charities; - whether the organization
maintains direction and control when operating through intermediaries; and - whether the organization
conducts any illegal activities, or violates any Canadian anti-terrorism
legislation.
The Guidance includes links to CRA’s main
policies or guidances on each subject.
The Guidance does not set out any new policies or requirements, but is
valuable as a central resource for some of the main operational issues that
will face charities when operating, and which will be reviewed by CRA on an
application for registration. Organizations
that are considering applying for charitable registration should consult the
policies and guidances to determine whether their proposed activities fit
within these rules. If they do not, it
may be necessary to consider whether the proposed activities or purposes can be
modified so as to comply.
CRA has also released a new
document summarizing the consequences where a charity fails to file its
annual T3010 Information Return. It
confirms that the consequence of failing to file the T3010 – which is due six
months after the end of the charity’s fiscal year – is revocation of charitable
registration. Once registration has been
revoked for failure to file, a charity must re-apply as a new applicant in
order to be re-registered.
In order to give charities a chance to
avoid this consequence, CRA sends a series of notices to the charity advising
of the need to file the T3010. CRA
confirms that it will generally send the following notices when it does not
receive the T3010 on time:
- three months after the end of
the charity’s fiscal period, CRA sends the charity a computer-generated
reminder (TX11D, Reminder to Registered Charities to File Return). - four months after the end of
the charity’s fiscal period, if the charity has provided CRA with its email
address, CRA sends the charity an email reminder (Reminder to file your T3010,
Registered Charity Information Return). - seven months after the end of
the charity’s fiscal period, CRA sends the charity a notice (T2051A, Notice of
Intention to Revoke a Charity’s Registration). - eight months after the end of
the charity’s fiscal period, CRA may try to contact representatives of the
charity by telephone to remind them again to file the annual information
return. - ten months after the end of the
charity’s fiscal period, CRA sends the charity a final notice (T2051B, Notice
of Revocation of Charity’s Registration) that sets out the effective date of
revocation and includes Form T2046, Tax Return Where Registration of a Charity
is Revoked.
It is very important that charities ensure
they have filed their T3010 returns on time.
As noted, re-registration requires an entirely new application and
generally entails a full review of the basis for registration. Despite having previously registered the
organization, CRA may raise new concerns or objections on a re-application
which can create difficulties in obtaining a reinstatement of
registration. For this reason, charities
should ensure that they have appropriate reminder systems in place to ensure
that they do not find themselves in this position.
