Questions and answers for the media

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. 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.

3. 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.

4. Can a charity become involved in political activities?

Under the Act, a charity may devote a limited amount of its resources to non-partisan political activities that help further its charitable purposes. Political activities are those that explicitly communicate to the public that a law, policy, or decision of any level of government in Canada or in a foreign country should be retained, opposed, or changed. As of June 2012, political activities also include the making of a gift to a qualified donee intended to support the recipient’s political activities.

Although a charity may have some political activities, a charity can never have a political purpose. The courts have determined political purposes to be those that:

• seek to further the interests of a particular political party, or support or oppose a political party or candidate for public office; or

• retain, oppose, or change the law, policy, or decision of any level of government in Canada or a foreign country.

For more information, see Policy statement CPS-022, Political activities and Resources for charities about political activities.

As announced in Budget 2016, the CRA is collaborating with the Department of Finance to clarify the rules governing political activities. The CRA held an online consultation and in-person consultations with representatives from the charitable sector in seven cities across Canada. For more information go to Clarifying the rules governing charities’ political activities: consultation process 2016 to 2017.

5. What triggers an audit?

The most common reasons the CRA may select a charity for audit include:

• 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 The audit process for charities.

6. 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. This provides transparency to Canadians regarding the decisions of the CRA with respect to charities.

7. 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.

8. 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 and the compliance-related news releases .

9. 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?

Date modified:

2017-04-27