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 Once registration has been revoked for failure to file, a charity must re-apply as a new applicant in order to be re-registered.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.