1. What are the differences between a registered charity and a non-profit organization?

Charities are corporate bodies, trusts, or unincorporated associations that are constituted exclusively for charitable purposes. These purposes fall under one or more of four different categories, namely:

• the relief of poverty
• the advancement of education
• the advancement of religion
• certain other purposes that benefit the community in a way that the courts have said is charitable

For more information, see What is charitable?

Registration exempts a charity from income tax and allows it to issue official donation receipts for income tax purposes. For more information, see Advantages of registration.

From an income tax perspective, non-profit organizations are associations, clubs, or societies that are not charities and that are organized and operate exclusively for social welfare, civic improvement, pleasure, recreation, or any other purpose except profit. No part of their income is payable to, or is otherwise available for the personal benefit of any proprietor, member, shareholder, trustee, or settlor thereof.

Non-profit organizations are also exempt from income tax, but they cannot issue official receipts for donations.

For more information, go to What is the difference between a registered charity and a non-profit organization?

2. How long does it take the Canada Revenue Agency (CRA) to process an application for charitable registration?

When applying for charitable status, applicants need to demonstrate that they meet the requirements of charity law in order to be granted charitable status. The Federal Court of Appeal has confirmed that the onus is on the applicant to provide the information necessary to demonstrate that its current and proposed activities further charitable purposes. Each application for registration is unique and factors such as the complexity and completeness of an application, the speed with which the applicant provides information to the CRA, and the volume of applications received by the CRA, all affect processing times.

In accordance with our service standards, the CRA aims to initiate meaningful contact with the organization within six (6) months of receiving a complete application.

For more information, visit the CRA webpages Charities Directorate service standards and Questions and answers about applying for registration.

3. Can I get information about the affairs of a particular registered charity?

The confidentiality provisions of the Income Tax Act prevent the CRA from discussing the affairs of a particular charity without the consent of an authorized representative. However certain information about a registered or revoked charity is available to the public.

For more information, go to How to get information about a charity.

4. What can a charity spend on fundraising?

If the ratio of its fundraising costs to its fundraising revenue is:

• Under 35%, it is unlikely to generate questions or concerns by the CRA.

• Between 35% and 70%, the CRA will examine the average ratio over recent years to determine if there is a trend of high fundraising costs. The higher the ratio, the more likely it is the CRA will be concerned the charity is engaged in fundraising that does not comply with the requirements of the Act.

• Above 70%, this level will raise concerns with the CRA. The charity must be able to provide an explanation and rationale to show that it is not engaged in fundraising that does not comply with the requirements of the Act.

Note that these fundraising ratios aren’t sufficient by themselves to determine whether a charity complies with the requirements of the Act. They provide a way to generally gauge a charity’s fundraising performance and understand the circumstances when the CRA is likely be to be concerned.

For more information, see Guidance CG-013, Fundraising by registered charities.

5. Can a charity become involved in advocacy activities?

Under the Act, a charity may fully engage in public policy dialogue and development activities (PPDDA) that help further its charitable purposes. PPDDAs involve seeking to influence the laws, policies, or decisions of any level of government in Canada or in a foreign country.

For more information, see Guidance CG-027, Public policy dialogue and development activities by charities.

6. What triggers an audit?

A charity can be selected for audit for various reasons including the following:

• random selection
• referrals from other areas of the CRA
• complaints from the public
• articles in the media or other publicly available sources
• to review specific legal obligations under the Act
• information from their T3010 annual information return
• to follow up on a previous compliance agreement

For more information, go to Compliance within the charitable sector.

7. What information about audits is publicly available?

The confidentiality provisions in the Income Tax Act prevent the CRA from publicly disclosing:

• whether a charity is under audit
• the status of an audit
• the next steps of an audit
• whether a complaint was received about a charity

Certain information about revocations, annulments, and sanctions that are the result of an audit is available to the public on the List of charities. This can include the effective date and a summary of the decision. The Act also allows the CRA to release a copy of the letter(s) sent to the charity setting out the reasons for the decision, in the language in which they were written. This provides transparency to Canadians regarding the decisions of the CRA with respect to charities.

8. What are the consequences of revocation?

When a charity's registration is revoked, it:

• will have its name and the reason for its revocation posted in Part I of the Canada Gazette and in the online list of revoked charities on the Charities and giving webpages

• cannot issue official donation receipts for gifts it receives

• is no longer exempt from income tax as a registered charity

• must transfer all its remaining property to an eligible donee or be subject to a revocation tax equal to the property's full value

For more information, go to Consequences of revocation.

9. What consequences do donors or registered charities face if they are involved with gifting tax shelter schemes?

The CRA audits every gifting tax shelter that offers official donation receipts in excess of the value of any property donated and to date has not found a single arrangement that complies with the Income Tax Act. A significant number of charities have been revoked for inappropriate involvement with gifting tax shelter schemes, and many investors have been reassessed to disallow all or part of their claimed donations, often being charged interest and penalties. As of March 31, 2015, the CRA has reassessed more than 195,000 taxpayer returns denying in excess of $6.6 billion in donation claims.

For more information, go to Tax Alert Warning: If you donate to a gifting tax shelter, expect to be audited.

10. How can donors protect themselves from fraud?

Before deciding to give, donors can get basic information on any registered charity. They can verify that the charity is registered with the CRA by consulting the List of charities. They can also get publicly available documents on each registered charity, as well as a copy of the charity’s latest financial statements or information return.

For more information, go to How to get information about a charity.

Donors should also read How can I donate wisely and avoid fraud?