Registered charities play an essential role in Qu\u00e9bec society. To carry out their mission, they rely on the commitment of qualified individuals who serve as directors. A question frequently arises in this context: is it possible to compensate directors while complying with the applicable legal and tax framework?<\/p>\n\n\n\n
Generally, directors of a registered charity act on a volunteer basis. This approach is consistent with the organization\u2019s non-profit mission, as well as with the expectations of donors and the general public.<\/p>\n\n\n\n
That said, Qu\u00e9bec corporate legislation does not, in and of itself, prohibit the compensation of directors. For example, the Companies Act<\/em> (Qu\u00e9bec) expressly provides that an organization may pay remuneration to its directors, unless its constating documents or by-laws provide otherwise.<\/p>\n\n\n\n Accordingly, before compensating its directors, an organization should first carefully review its constating documents, by-laws and any other applicable internal policies. If any of these documents prohibit the compensation of directors, it may nevertheless be possible to amend them.<\/p>\n\n\n\n Once it is determined that director compensation is permitted from a corporate law perspective, the organization must ensure that such compensation complies with the limits imposed by tax authorities.<\/p>\n\n\n\n The CRA expects that any compensation paid be reasonable. Although this concept is not expressly defined in tax legislation, it generally means that:<\/p>\n\n\n\nConstraints imposed by tax authorities<\/h2>\n\n\n\n