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Not-For-Profits

There’s a definite distinction when it comes to Not-for-Profit organizations (NPO) and Registered Charity. Both have different tax requirements under the Canadian tax code. A charity needs to apply to the Canada Revenue Agency (CRA) to be officially registered as a charity. It is exempt from tax and is allowed to issue donation receipts. NPO’s too are generally exempt from tax as long as they meet certain criteria in the tax legislation, though it cannot issue donation receipts. 

 

Importantly, an NPO can be unincorporated or incorporated. Unincorporated NPOs are not required to file an income tax return. We will help NPOs file their tax returns by taking on board the following considerations:

  • We will file an annual T2 corporate Income Tax Return for incorporated NPOs even though they are generally exempt from income tax, a return must still be filed. 
  • We will ensure that an incorporated NPO does not pay tax on its profits or any capital gains that it realizes.
  • We will file the return on time, within six months of an NPO’s taxation year-end.
  • We will file a T3 Trust Income and Information Return for an NPO that provides dining, recreation, or sporting facilities. This return is filed within 90 days of the end of the calendar year.


Additionally, a T1044 or a Non-Profit Organization (NPO) Information Return is due if the NPO meets the following conditions:

 

  • It has received taxable dividends, interest, royalties, or rentals of more than $10,000
  • Its total assets were more than $200,000 at the end of the previous fiscal year
  • It filed an NPO Information Return for the previous fiscal year.

 

Under these conditions, having consulted with the NPOs, we will file a T1044. We will also prepare to file this return for future years while the NPO retains its status to avoid costly penalties. We can also advise NPOs as to the use of the CRA’s Voluntary Disclosures Program to reduce or eliminate late penalties.

 

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