Valley First

Registering the Non-Profit

In the case of a non-profit organization, you’ll need to register with Revenue Canada for income tax exemption—if your organization will not be accepting gifts and issuing official receipts for income tax purposes, then there is no need to register.

 

What is a non-profit organization?

  • In a non-profit organization, there is no owner, stockholder or trustee who shares in profits and losses.
  • A non-profit exists to promote a mission that enhances the good of society, rather than earning a revenue.
  • These organizations are often eligible for tax-exempt status and some, but not all, can receive tax deductible contributions.

EXPERT TIP

If you are starting a non-profit, practice good record keeping so that you don’t run into any issues with reporting requirements later on.

Qualifying for registration

If your organization does need to register with Revenue Canada, you'll need to demonstrate that your organization truly qualifies as a non-profit. There are two principle factors that disqualify your organization for registration.

  • The income of the organization may not personally benefit any proprietor, member, shareholder, trustee or settlor of the organization. This does not prevent the organization from paying for services rendered.
  • Your organization may not espouse, promote, support or seek to achieve any political agenda, party, purpose or doctrine, nor may your organization seek to persuade the public to adopt a particular social view or attempt to bring about or oppose changes in the law or government policy.

Advantages of registration

  • Your non-profit organization will be able to issue receipts for gifts received. These receipts reduce the tax payable for the individual donor, or, in the case of a corporation, reduce the taxable income.
  • The second benefit is that, upon registration, the organization is exempt from paying income tax.

Obligations of a registered charity

  • A non-profit organization needs to donate its resources to charity.
  • A non-profit will need to continue to meet the requirements that qualified it in the first place.
  • A Registered Charity Information Return will need to be filed within six months of each year-end.

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