Schedule 6 – Detailed financial information, Schedule 7 – Political activities, part of the Completing Form T3010 (13), Registered charity information return webinar.

On to Schedule 6, the detailed financial information.

Complete Schedule 6 if any of the following apply:

• The charity's gross revenue exceeds $100,000.
• The amount of all assets (for example, investments or rental properties) not used in charitable programs or administration exceeds $25,000.
• The charity currently has permission to accumulate property during this fiscal period.

Depending on the accounting methods used and the allocation of revenues and expenditures, the financial statements may not match the financial information on Form T3010.

If any of the above points apply to the charity, you have to complete Schedule 6 and not Section D.

Schedule 6 - Assets

In this section, your charity will report all its information relating to its assets.

Lines 4100 to 4170 – Enter the appropriate line assets such as cash on hand, bank accounts, and long-term investments.

Short-term investments are easily convertible to cash and have maturity dates of less than a year.

Long-term investments mature in more than a year.

Lines 4155, 4160, and 4165 – A charity must report its capital assets at their cost to the charity. However, use the fair market value of the assets if they were donated and the costs if they were purchased. Other capital assets outside of Canada should be reported on line 4165 and could include such items as equipment, computers, furniture, and vehicles.

Line 4166 – Accumulated amortization is on capital assets only and should be a negative number.

Line 4170 – Other assets—enter the value of any assets the charity has that do not fall under any of the previous categories. Also record any restricted funds on line 4170.

Line 4180 – Enter the value of 10-year gifts included on lines 4100 to 4170. Such gifts received by registered charities are gifts subject to the donor's written trust or direction that the registered charity hold on to the gift for at least 10 years. These gifts are a form of enduring property.

Line 4250 is the amount of assets from lines 4150, 4155, 4160, 4165, and 4170 that were not used in charitable programs or administration for the year.

Schedule 6 - Liabilities

Line 4310 – Deferred revenue applies only if using the accrual method. An example of deferred revenue is when a charity operates a daycare and has been paid in advance for services that haven't yet been rendered.

Line 4330 – An example of another liability could be the unused part of a government grant that you have to repay or the long-term part of debt obligations such as a mortgage.

Schedule 6 - Revenue (lines 4500 to 4560)

All revenue sources must be recorded on this schedule. This slide highlights a few of the lines that cause the most confusion regarding the form.

Line 4500 is used to record gifts received from individuals or businesses for which the charity issued a tax receipt. Do not record gifts received from other registered charities on this line.

Line 4505 – Enter the value of all 10-year gifts received which have been included on lines 4500, 4510, 4575, 4630, and 4650.

Line 4530 is used to record gifts received from individuals or businesses for which the charity did not issue an official donation receipt. For example, collection boxes or anonymous gifts.

Line 4510 is used to record gifts received from other registered charities. Enter the total amount received.

Charities should not issue receipts to other registered charities.

Lines 4540, 4550, 4560 are used to record funding from federal, provincial/territorial, and municipal governments.

Schedule 6 - Revenue (lines 4580 to 4700)

Line 4575 - Non-tax receipted amounts received from outside Canada

Line 4580 – Do not report a loss. Interest and dividends are always positive or zero. Only capital investments can generate a loss.

Line 4590 - Report gross proceeds from the sale of assets and record the gain or the loss on line 4600.

Line 4630 – Record total gross amount of non-tax-receipted revenue from fundraising, not just the profit earned. Do not include revenue for which tax receipts were issued. These amounts should be reported as gifts on line 4500.

Line 4700 – The total revenue should go on this line. Revenue lines that have not been presented today are explained in Guide T4033.

Schedule 6 - Expenditures (lines 4800 to 4850)

Expenses are itemized twice in this section.

• First in specific expenditure categories such as travel and vehicle, occupancy costs and salaries; and second,
• on lines 5000 through to line 5040 on those lines that indicate program expenditures, amounts spent on management and administration expenses, amounts spent on fundraising and political activities, as well as other expenditures and gifts to qualified donees.

Lines 4800 to 4850 are self-explanatory and Guide T4033 has more examples.

Schedule 6 - Expenditures (lines 4860 to 4890)

Line 4860 – Record any expenses related to contractors that you hired for specific work, such as accountants or other professionals.

Line 4870 – Include any training or education that you provided to your employees or volunteers, such as courses, seminars, and conferences.

Line 4880 – Include all of your salaries, honoraria, and benefits. Transpose the amount from Schedule 3.

Line 4890 – Enter the fair market value of all donated goods being used for charitable programs, for example, food used at a food bank or books for a library.

If the donated asset is being used for charitable programs, the fair market value of that asset should be reported as an expenditure on this line and also on line 5000.

Schedule 6 - Expenditures (lines 4891 to 4920)

Line 4891 – Record the cost of all purchased supplies and assets not otherwise recorded. Do no report assets that have been capitalized.

Line 4900 – Record the amount of accumulated amortization on capital assets. Amortization is often referred to as depreciation. Any assets being used for charitable activities must also be reported on line 5000.

Line 4910 – If the charity provides research grants or scholarships as part of their charitable activities, it would be recorded here.

Line 4920 – Enter the total expenditures not included on lines 4800 to 4910, for example, the premium a charity paid to maintain life-insurance policies that donors have given to the charity. This amount should also be on line 5020. For other examples, see the guide T4033.

Schedule 6 - Expenditures (lines 5000 to 5050)

This is where you need to take the amount on line 4950 and redistribute it on lines 5000 to 5050.

Line 5000 – If you are a charitable organization, it is likely that most of your charitable program expenditures will be recorded on this line. If you are a public or private foundation, gifts made to all qualified donees are very important. These gifts are recorded on line 5050.

Note:

If a charity records nothing on lines 5000 or 5050, it will appear to have not spent any resources on charitable programs or gifting to qualified donees.

Line 5010 – Includes expenditures related to management and administration, for example, buying supplies and equipment.

Line 5020 – Total expenses the charity paid out for fundraising activities. Any expenditures made in applying for grants or other types of government funding and/or gifts from qualified donees (usually foundations) should be shown on line 5010 and not 5020.

Line 5030 – Enter the same amount that was reported at Question C5(b). This includes the part of the amount on line 4950 that represents expenditures for political activities, inside or outside Canada, and the amount on line 5031 that was reported at Question C5(c).

It is important for charities to complete this line if they carry out any activities such as petitions, marches, or media campaigns to try to change the law, as described in Policy Statement CPS-022, Political Activities. When the public observes that a charity is campaigning to change or retain a law, and they see that the charity has left this field blank, they can question the charity's reporting things correctly. This could lead to complaints about the charity.

Line 5040 – Other expenditures. This line is rarely used, and we ask you to see the guide T4033 if you have any questions about that line.

Line 5050 includes all of the amounts that your charity has given to other qualified donees.

Line 5100 reports a charity's total expenditures. Putting a “0” on line 5100 or leaving it blank may fail to take into account all of the amounts listed in the expenditures section of the return. This often appears to be an addition error or a mistake in transposing numbers from the financial statements.

The Charities Directorate sends a letter to charities who have improperly completed line 5100, advising them of the error and reminding them to properly complete those fields in the future.

Schedule 6 - (lines 5900 and 5910)

All charities must devote their charitable resources to charitable activities. Each year charities must spend at least 3.5% of the average value of property owned by the charity that was not used in charitable activities if the amount is greater than:

$100,000 (charitable organizations)

$25,000 (charitable foundations)

(If less than $100,000 or $25,000, the DQ does not apply.)

Property, for the purpose of calculating the disbursement quota, include any real estate or other property that was not used directly in charitable activities or administration. For example, cash, stocks, land, or buildings not used directly in charitable activities or administration.

The value of the property is an average value based on the specific number of periods over 24 months.

Line 5900 – Enter the average value of property not used directly in charitable activities or administration during the 24 months before the beginning of the fiscal period, basing the value on the number of periods chosen by the charity.

Line 5910 – Enter the average value of property not used directly in charitable activities or administration during the 24 months before the end of the fiscal period, basing the value on the number of periods chosen by the charity.

To calculate the disbursement quota requirement, multiply each line by 3.5%. Use only the average value of assets that are not being used directly in charitable activities or administration.

Any amount accumulated to date in accordance with written approval of the minister of national revenue and any income earned on these amounts should be subtracted from this line before multiplying by 3.5%.

More information on how to calculate the disbursement quota please see our website go to www.cra.gc.ca/charities, when their select « Operating a registered charity » and then see « Annual spending requirements (disbursement quota) ».

Schedule 7 – Political activities

Only complete this schedule if your charity conducted political activities, (line 2400), or received funds intended for political activities from foreign donors during the fiscal period (line 5032).

A registered charity may pursue political activities only if the activities are non-partisan, related to its charitable purposes, and limited in extent. A political activity is any activity that explicitly communicates to the public that a law, policy, or decision of any level of government inside or outside Canada should be retained, opposed, or changed.

In Table 1, describe your political activities, including gifts to qualified donees intended for political activities, and explain how these relate to your charitable purposes.

Example

ABC charity is established to promote health by giving medication to cancer patients in Canada. The charity wants the Canadian government to change the drug review process to establish an open-border North American standard that would allow drugs currently only approved in the US to be readily sold in Canada.

Table 2 – Identify how the charity participated in or carries out political activities (including funding political activities) during the fiscal year, by reporting the types of resources used to carry out these activities. Tick all the boxes that apply. As an example: media releases and advertising, publications, rallies demonstrations, letter writing campaign.

The term resource is not defined in the Income Tax Act but we consider the term to include the total of a charity's financial assets, as well as everything the charity can use to further its purposes. This includes employees, volunteers, money, and property (such as buildings, equipment, land, and supplies).

Table 3 – If you entered an amount on line 5032, fill out Table 3. This section is for funding received from donors outside of Canada for political activities. Enter the political activities the funds were intended to support, the amount received from each country outside Canada, and its corresponding country code.

The country code can be found in Guidance CG-002, Canadian Registered Charities Carrying Out Activities Outside Canada.

References

Here are a few reference tools which can help you along the way in completing your Form T3010.

T4033(E) Rev 13 – It's a detailed guide named Completing the Registered Charity Information Return, this guide will provide you with details of each section to help you complete your return.

We also have recorded webinars available on our web pages on the following topics:

1. Updated fundraising guidance
2. Orientation for board members
3. Completing Form T3010-1, Registered charity information return
4. Non-compliance issues and how to avoid them
5. Activities outside of Canada
6. Political activities
7. Gifting and receipting
8. Financial statements and books and records

There is also Quick view, an online resource that builds information currently displayed in the charities listings into graphs and tables. It highlights a charity's activities, revenues, and expenditures at a glance. With more Canadians using the Charity Quick View, we encourage your charity to verify the information on your Form T3010 to ensure your data is accurately reported. Should you find errors, you can simply complete Form T1240, Registered Charity Adjustment Request, which can be found on the Charities and Giving website. To access Quick View, simply go to www.cra.gc.ca/charities and access the Charities Listing section. Enter your charity's name or business number; then access your form. Quick View will automatically generate your T3010 information from the year 2010 and onwards.

Thank you and we hope you enjoyed this webcast. If you would like more information on this topic, please contact our client service at 1-800-267-2384.

If you haven't already signed up for the electronic mailing list, we invite you to register on the Charities and Giving website by selected “Educational Resources for Charities and Electronic Mailing List.” Once registered, you will receive emails as new information and updates affecting registered charities becomes available. The electronic mailing list is also one of the communication channels we use to let you know when the next Charities Information webinars will take place.