Post on 23-Dec-2015
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INCORPORATING AND REGISTERING A CHARITY MAY 2014
PART 1: THE DIFFERENCE BETWEEN A REGISTERED CHARITY AND NON-PROFIT ORGANIZATION
CA COMMUNITY AMBASSADORS
Disclaimer:The contents of this presentation are provided as general information only. It is not legal advice. If you have a legal problem, you should consult a lawyer.Your use of this information in this presentation is your responsibility and is at your own risk. This information is provided ‘as is’, without warranty of any kind. The information in this presentation was correct at the time it was printed. Be aware that there may have been subsequent changes which make the information outdated.
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OUR GOAL• To explain the requirements for a Canadian Registered
Charity as mandated and regulated by the Canadian Revenue Agency.
• To explain the process of incorporating and registering a charity
• To provide resources to support non-profit organizations
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CA COMMUNITY AMBASSADORS
The mission of the Community Ambassador Committee is to connect Alberta CA’s with not-for-profit organizations to offer financial expertise, leadership and guidance using the CA skill set.
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PRESENTATION OVERVIEW:
Part 1: Charity Vs. Non-Profit Organization
Part 2: Requirements for a Registered Charity
Part 3: Process of Registering as Charity
Part 4: Process of Incorporating
Part 5: Compliance
Part 6: Resources
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PART 1
THE DIFFERENCE BETWEEN A REGISTERED CHARITY AND NON-PROFIT ORGANIZATION
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DEFINITIONS: PRIMARY DIFFERENCES
Definitions | Requirements | Incorporating | Registering as a Charity | Compliance | Resources
• Registered charities are often referred to as Not-for-Profit Organizations. However, while both types of organizations operate on a Not-for-Profit basis, the two types are defined differently under the Income Tax Act.
• Registered charities must be established and operate exclusively for charitable purposes, and an entity must apply to the Canada Revenue Agency (CRA) to be approved as a charity.
• Not-for-Profit Organizations (NPO’s) can operate for social welfare, civic improvement, pleasure, sport, recreation or any other purpose except profit. NPO’s are not required to register with the CRA and are not issued a registration number. NPO’s cannot issue official donation tax receipts, and are generally (but not always) exempt from paying tax.
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DEFINITIONS: PRIMARY DIFFERENCES
Definitions | Requirements | Incorporating | Registering as a Charity | Compliance | Resources
• The primary differences between a non-profit organization and a registered charity is the following:
• Tax receipts can be issued by a registered charity• A registered charity must be approved by Canadian
Revenue Agency• Spending requirements must be met by a registered
charity
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DEFINITIONS: SUMMARY
Definitions | Requirements | Incorporating | Registering as a Charity | Compliance | Resources
Registered charity NPO
Purposes • must be established and operate exclusively for charitable purposes
• can operate for social welfare, civic improvement, pleasure, sport, recreation, or any other purpose except profit
• cannot operate exclusively for charitable purposes
Registration • must apply to the Canada Revenue Agency (CRA) and be approved for registration as a charity
• no registration process for income tax purposes
Charitable registration number • is issued a charitable registration number upon approval by the CRA
• is not issued a charitable registration number
Tax receipts • can issue official donation receipts for income tax purposes
• cannot issue official donation receipts for income tax purposes
Spending requirement (disbursement quota)
• must spend a minimum amount on its own charitable activities or as gifts to qualified donees
• not applicable
Designation • is designated by the CRA as a charitable organization, a public foundation, or a private foundation
• does not receive a designation
Returns • must file an annual information return (Form T3010) within six months of its fiscal period-end
• may have to file a T2 return (if incorporated), and/or an information return (Form T1044) within six months of its fiscal period-end
Personal benefits to members • cannot use its income to personally benefit its members
• cannot use its income to personally benefit its members
Tax exempt status • is exempt from paying income tax • is generally exempt from paying income tax
• may be taxable on property income or on capital gains
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SHOULD OUR ORGANIZATION BECOME A REGISTERED CHARITY: THE PROS AND CONS
Definitions | Requirements | Incorporating | Registering as a Charity | Compliance | Resources
• Pros
• Official donation receipts can be issued which allows for individuals to claim donations as a tax deduction.
• This results in increased fundraising opportunities
• Receives a designation by the CRA as charitable organization
• Allows for stronger recognition by stakeholders
• Cons
• Must apply to the CRA and be approved for registration as a charity. This process can be time consuming
• Must spend a minimum amount on its own charitable activities
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RESOURCES
Definitions | Requirements | Incorporating | Registering as a Charity | Compliance | Resources
• Thinking of Becoming a Registered Charity
• Charity Central• Applying for Registration
• CRA• Canada Not-for-profit Corporations Act (CNCA) Suitcase
• Mark Blumberg
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THE END OF PART 1.
Definitions | Requirements | Incorporating | Registering as a Charity | Compliance | Resources