An organization registered as a charity and that has a charitable registration number can issue tax receipts to its donors. These receipts allow donors to obtain tax deductions, which can encourage them to donate more. To obtain charitable organization status, an organization must meet certain criteria that demonstrate sound management (see below), which can also motivate donors.
In order to be registered, a charitable organization must meet a number of obligations every year (filing an information return, meeting a spending requirement, fulfilling responsibilities towards recipients of its charitable activities, volunteers, donors and the general public, and meeting certain legislative and regulatory obligations with several levels of government (federal, provincial and territorial) etc.). It’s therefore very important to know if this option is right for you in order to make an informed decision.
For more information on this topic, please consult the section entitled Is Registration Right for You? on the Canada Revenue Agency website.
To encourage donations from foundations, corporations or individuals and to diversify the organization’s sources of funding. Furthermore, any organization that is a registered charity or non-profit organization is exempt from paying income tax.
To be eligible:
1. An organization must have been created to meet on these four charitable goals:
- relief of poverty
- advancement of education – arts organizations whose mission includes developing the public’s knowledge in the arts sector are eligible under this category
- advancement of religion
- purposes beneficial to the community – arts organization that have other charitable missions are eligible under this category
Please note: The law has recognized organizations that produce arts festivals as being charitable organizations.
2. An organization must demonstrate that it meets a “Public Benefit Test.”
3. An organization must have been incorporated or otherwise created in Canada and reside in Canada.
4. A charitable organization must devote all of its resources (money, goods, employees, and volunteers) towards its charitable goals.
2. Get informed.
3. Submit an application using Form T2050, Application to Register a Charity under the Income Tax Act.
4. Follow the instructions contained in Guide T4063: Registering a Charity for Income Tax Purposes.
5. Send your application to:
Canada Revenue Agency
Ottawa ON K1A 0L5
6. Lastly, register within 30 days with the Quebec government by completing an Application for Registration: Charities, Museums, Cultural or Communications Organizations and Québec or Canadian Amateur Athletic Associations TP-985.5-V and sending it to the Ministère du Revenu du Québec. This process is simpler than its federal counterpart.