Penalties and suspensions
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Penalties and suspensions
In cases where a registered charity or a registered Canadian amateur athletic association (RCAAA) is involved in serious non-compliance, or for repeat or multiple infractions, the Canada Revenue Agency (CRA) may impose intermediate sanctions (that is, financial penalties or suspensions) or may also proceed to revocation. Note, however, that if a registered charity or an RCAAA fails to file its annual information return, the CRA will proceed directly to revocation.
Find the names of charities that have received a sanction by using the Charities Listings advanced search and selecting either “Penalized” or “Suspended” from the “Sanction” dropdown list.
Find RCAAAs that have received a sanction by searching the Lists of registered Canadian amateur athletic associations.
The charts below list various infractions as well as the potential corresponding penalties and suspensions.
| Infraction | Penalty/Suspension for first infraction | Penalty/Suspension for repeat infractions |
|---|---|---|
| Not filing an annual information return (Form T3010) on time | $500 penalty (assessed when an application for re-registration is made) | $500 penalty (assessed when an application for re-registration is made) |
| Issuing receipts with incomplete information | 5% penalty on the eligible amount stated on the receipt | 10% penalty on the eligible amount stated on the receipt |
| Not keeping proper books and records or providing them to authorized CRA officials when requested | Suspension of tax-receipting privileges | Suspension of tax-receipting privileges |
| Charitable organization or public foundation carrying on an unrelated business | 5% penalty on gross unrelated business revenue earned in a fiscal period | 100% penalty on gross unrelated business revenue earned in a fiscal period and suspension of tax-receipting privileges |
| Private foundation carrying on a business | 5% penalty on gross business revenue earned in a fiscal period | 100% penalty on gross business revenue earned in a fiscal period and suspension of tax-receipting privileges |
| Foundation acquiring control of a corporation | 5% penalty on dividends paid to the charity by the corporation | 100% penalty on dividends paid to the charity by the corporation |
| Undue benefit provided by a charity to any person or entity. This includes making gifts to non-qualified donees, except when such gift or transfer is made in the orginary course of a charity's programs. | 105% penalty on the amount of undue benefit | 110% penalty on the amount of undue benefit. If the undue benefit is not conferred from a gift the suspension of tax-receipting privileges is also applicable. |
| Issuing receipts when there is no gift or when the receipt contains false information (when the total penalties do not exceed $25,000) | 125% penalty on the eligible amount stated on the receipt | 125% penalty on the eligible amount stated on the receipt |
| Issuing receipts when there is no gift or when the receipt contains false information (when the total penalties exceed $25,000) | 125% penalty on the eligible amount stated on the receipt and suspension of tax-receipting privileges | 125% penalty on the eligible amount stated on the receipt and suspension of tax-receipting privileges |
| Making a gift to a person who is not a qualified donee (not including a gift made to an individual in the course of a charity's programs) | 105% penalty on the amount of the gift made to the non-qualified donee | 110% penalty on the amount of the gift made to the non-qualified donee |
| Entering into a transaction, including making a gift to another registered charity, to delay expenditures on charitable activities | For the charities involved, a 110% penalty on the amount of the expenditure avoided or delayed | For the charities involved, a 110% penalty on the amount of the expenditure avoided or delayed |
| Accepting gifts or transfers of property on behalf of a suspended qualified donee | Suspension of tax-receipting privileges | Suspension of tax-receipting privileges |
| Private foundation not divesting itself of a percentage of its shares at the end of its fiscal period, in respect of a class of shares | 5% of the result of multiplying the divestment obligation percentage of the private foundation for the fiscal period by the fair market value of all issued and outstanding shares in that class, except when there is a repeat infraction or another penalty for not disclosing, as indicated below, that applies for the fiscal period | 10% of the result of multiplying the divestment obligation percentage of the private foundation for the fiscal period by the fair market value of all issued and outstanding shares in that class at the end of the fiscal period |
| Private foundation not disclosing a material transaction in a class of shares at the end of its fiscal period when disclosure is required | 10% of the result of multiplying the divestment obligation percentage of the private foundation in that class of shares by the fair market value of all issued and outstanding shares in that class for the fiscal period | 10% of the result of multiplying the divestment obligation percentage of the private foundation in that class of shares by the fair market value of all issued and outstanding shares in that class for the fiscal period |
| Private foundation not disclosing a material interest held at the end of its fiscal period, by a relevant person, in a class of shares when disclosure is required | 10% of the result of multiplying the divestment obligation percentage of the private foundation in that class of shares by the fair market value of all issued and outstanding shares in that class for the fiscal period | 10% of the result of multiplying the divestment obligation percentage of the private foundation in that class of shares by the fair market value of all issued and outstanding shares in that class for the fiscal period |
| Private foundation not disclosing its total corporate holdings percentage at the end of its fiscal period in a class of shares when disclosure is required | 10% of the result of multiplying the divestment obligation percentage of the private foundation in that class of shares by the fair market value of all issued and outstanding shares in that class for the fiscal period | 10% of the result of multiplying the divestment obligation percentage of the private foundation in that class of shares by the fair market value of all issued and outstanding shares in that class for the fiscal period |
| Gifts other than designated gifts received from a non-arm's length charity that are not spent by the recipient charity on its own charitable activities or transferred to an arm's length qualified donee in the current or following tax year – this amount is in addition to a charity's disbursement quota | For the recipient charity, a penalty of 110% of the amount not expended or gifted | For the recipient charity, a penalty of 110% of the amount not expended or gifted |
| Carrying out partisan political activities, or political activities that are not connected and subordinate to the charity’s charitable purposes or carrying on political activities when the charity is not devoting substantially all its resources to charitable activities and purposes | One-year suspension of tax-receipting privileges | One-year suspension of tax-receipting privileges |
| Providing incomplete or inaccurate information on the annual information return (Form T3010) | Suspension of tax-receipting privileges until the required information is provided to the CRA on Form T3010 | Suspension of tax-receipting privileges until the required information is provided to the CRA on Form T3010 |
| Infraction | Penalty/Suspension for first infraction | Penalty/Suspension for repeat infractions |
|---|---|---|
| Not filing an annual information return (Form T2052) on time | $500 penalty (assessed when an application for re-registration is made) | $500 penalty (assessed when an application for re-registration is made) |
| Issuing receipts with incomplete information | 5% penalty on the eligible amount stated on the receipt | 10% penalty on the eligible amount stated on the receipt |
| Not keeping proper books and records or providing them to authorized CRA officials when requested | Suspension of tax-receipting privileges | Suspension of tax-receipting privileges |
| Carrying on an unrelated business | 5% penalty on gross unrelated business revenue earned in a fiscal period | 100% penalty on gross unrelated business revenue earned in a fiscal period and suspension of tax-receipting privileges |
| Undue benefit provided by an RCAAA to any person. This includes making gifts to any persons, except when such gift or transfer is made in the course of promoting amateur athletics in Canada on a nationwide basis. | 105% penalty on the amount of undue benefit | 110% penalty on the amount of undue benefit. If the undue benefit is not conferred from a gift the suspension of tax-receipting privileges is also applicable. |
| Issuing receipts when there is no gift or when the receipt contains false information (when the total penalties do not exceed $25,000) | 125% penalty on the eligible amount stated on the receipt | 125% penalty on the eligible amount stated on the receipt |
| Issuing receipts when there is no gift or when the receipt contains false information (when the total penalties exceed $25,000) | Suspension of tax-receipting privileges and 125% penalty on the eligible amount stated on the receipt | Suspension of tax-receipting privileges and 125% penalty on the eligible amount stated on the receipt |
| Making a gift to a person who is not a qualified donee (not including a gift made to an individual in the course of an RCAAA's programs) | 105% penalty on the amount of the gift made to the non-qualified donee | 110% penalty on the amount of the gift made to the non-qualified donee |
| Accepting gifts or transfers of property on behalf of a suspended qualified donee | Suspension of tax-receipting privileges | Suspension of tax-receipting privileges |
| Carrying out partisan political activities, or political activities that are not connected and subordinate to the promotion of amateur athletics in Canada on a nation-wide basis, or carrying on political activities when the association is not devoting substantially all its resources to that exclusive purpose and function | One-year suspension of tax-receipting privileges | One-year suspension of tax-receipting privileges |
| Providing incomplete or inaccurate information on the annual information return (Form T2052) | Suspension of tax-receipting privileges until the required information is provided to the CRA on Form T2052 | Suspension of tax-receipting privileges until the required information is provided to the CRA on Form T2052 |
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- Date modified:
- 2017-04-18