Tax Returns for Charities and Non-Profits

Before you can sort out the filing, you need to know which kind of organization you have. A registered charity files the T3010 every year, even in a year when it was inactive. A non-profit that isn't a charity may owe the CRA a T1044, a T2, or both, depending on how it's set up and how big it is.

Charity or non-profit

Both run without trying to make a profit, but the CRA treats them as different things. A registered charity has applied to the CRA, has a registration number, and exists only for charitable purposes: relieving poverty, advancing education, advancing religion, or other purposes that benefit the community. It's a type of qualified donee, which is what lets it issue official donation receipts, and it doesn't pay income tax.

A non-profit organization (NPO) is a club, society or association run for social welfare, civic improvement, pleasure, recreation or any other purpose except profit. It isn't registered with the CRA, has no registration number and can't issue official donation receipts. It's generally exempt from income tax, though it may have to pay tax on property income or capital gains. If you're operating as a charity, the CRA won't treat you as an NPO.

The T3010 for registered charities

The Income Tax Act requires every registered charity to file a T3010 Registered Charity Information Return each year. That includes a charity that was inactive or is no longer operating. The return is due no later than six months after the end of your fiscal period, so a December 31 year end means a June 30 deadline, and a March 31 year end means September 30.

A complete paper return includes Form T3010, financial statements (even for an inactive year) with the same fiscal year-end, and Form T1235 listing directors, trustees and like officials. Depending on the year, you may also need Form T1236 for qualified donees and amounts given to other organizations, and Form T1441 for grants to non-qualified donees. Filing online through your CRA account or certified software brings in the forms you need. The CRA recommends filing online and says it aims to have every T3010 filed online beginning in 2027.

A charity that's a corporation doesn't file a T2 corporate return while it has charitable status. If it loses that status, T2 filing starts again.

If a charity doesn't file

The CRA may revoke a charity's registration for failing to file. Once registration is revoked, the organization can no longer issue official donation receipts and is no longer exempt from income tax. It also has to give all its remaining assets to an eligible donee or pay a revocation tax equal to the full value of those assets.

When a non-profit files the T1044

The T1044 NPO Information Return applies to NPOs, and to agricultural organizations, boards of trade and chambers of commerce. An organization only has to file it for a fiscal period if one of these is true:

• It received, or was entitled to receive, more than $10,000 in total taxable dividends, interest, rentals or royalties in the fiscal period.
• Its total assets were more than $200,000 at the end of the previous fiscal period (book value, using generally accepted accounting principles).
• It had to file a T1044 for an earlier fiscal period.

That last point means that once you've had to file, you keep filing. The CRA's guide gives the example of an NPO with total assets of $350,000 at the end of one year and $198,000 at the end of the next. It still had to file for the second year, because the asset test looks back at the previous year, and it has to file for every year after that as well. The return is due no later than six months after the end of the fiscal period. Filing late costs $25 a day, with a minimum of $100 and a maximum of $2,500, though the CRA can waive the penalty if the return was late because of extraordinary circumstances beyond your control.

Incorporated non-profits also file a T2

The T1044 isn't always the only return. The CRA says a corporation generally has to file a T2 Corporation Income Tax Return, or a T2 Short Return, even if it's an NPO. The T2 is due within six months of the corporation's tax year-end, and our post on corporate tax returns covers how it works. An NPO whose main purpose is providing dining, recreational or sporting facilities has a different rule: its property is treated as held by a trust, and a T3 trust return has to be filed.

How we help

We prepare the annual return for charities and non-profits that report to the CRA, the one the CRA requires every year (a charity that doesn't file can lose its registration), along with the record-keeping your board and funders will want to see. If the books need work first, our bookkeeping includes year-end prep and catching up prior years. Our tax due dates page lists the other deadlines in one place.