Have you ever wondered how charities in Canada get their special status? Charities play a crucial role in helping people, animals, and the environment. However, to do their work effectively, they often need to register with the government. Let’s explore the process of registering a charity in Canada and what it means to be a registered charity.
1. Deciding to become a Registered Charity:
Registered charity versus a not-for-profit:
Having an understanding of the distinction between a charity and a not-for-profit is crucial for their operations. Charities have to concentrate on charitable activities to maintain their status, and they can issue receipts to donors for their contributions, which helps them with tax deductions. Not-for-profits have more flexibility in their activities, but they cannot issue tax receipts to their donors. Recognizing these differences is vital in determining how these organizations can function within the rules.
Advantages and obligations of becoming a registered charity:
Becoming a registered charity has its perks! You don’t have to pay certain taxes, and you can receive donations from other charities. Plus, you gain credibility in your community. But remember, with great status comes great responsibility. You’ll need to spend your resources on charitable activities, keep accurate records, and follow specific rules set by the government.
Factors that prevent an organization from becoming a charity:
Not every organization can become a charity. If your group engages in illegal activities or doesn’t have charitable purposes, you might not be eligible. It’s essential to understand these factors before applying for registration.
2. Steps Before Applying:
Charitable purposes:
Before diving into the registration process, it’s crucial to ensure that your organization’s mission aligns with charitable purposes. These purposes, such as alleviating poverty or advancing education, form the foundation of your charity’s work. Activities undertaken by your organization should aim to achieve these charitable goals and benefit the public or a significant section of it.
Preparing your governing document:
Your organization’s governing document serves as its roadmap, outlining its purpose, structure, and internal processes. Whether it’s a bylaws, articles of incorporation, or trust document, this document defines your charity’s identity and operations. It’s essential to ensure that your governing document reflects your organization’s charitable objectives and complies with legal requirements.
Types of registered charities:
Understanding the different types of registered charities helps you choose the most suitable structure for your organization:
- Charitable Organizations: These entities primarily conduct their charitable activities and receive funding from multiple donors. They must have more than 50% of their directors or officials at arm’s length, ensuring independence from undue influence.
- Public Foundations: Public foundations distribute a significant portion of their income to other registered charities or qualified donees while also conducting charitable activities of their own. They, too, require a majority of directors or officials to be at arm’s length.
- Private Foundations: Unlike public foundations, private foundations may have a single director or official who controls the charity. They can engage in their charitable activities or support other qualified recipients. Understanding these distinctions helps you choose the most appropriate structure for your organization’s goals and operations.
Head body versus internal division:
When considering your organization’s structure, you must decide whether to apply as a head body or an internal division:
- Head Body: As a head body, your organization exercises authority over internal divisions, ensuring consistent governance and oversight. Your governing documents must demonstrate control over internal divisions, including the ability to create or dissolve them, allocate resources, and set strategic direction.
- Internal Division: Alternatively, an internal division operates within an existing registered charity. While retaining autonomy over certain activities, it remains subject to the overarching governance and policies of the head body. Internal divisions must provide documentation demonstrating their relationship with the head body, including letters of good standing and relevant governing documents.
Understanding these structural options enables you to make informed decisions about your organization’s registration process, ensuring alignment with your charitable objectives and legal requirements.
3. Applying for Registration:
Required documents:
When applying, you’ll need to submit various documents, including your governing document and financial statements. Depending on your organization, you may also need to provide descriptions of your activities and any partnerships or contracts.
Describing activities:
Describe in detail the activities your organization plans to undertake. Include information like the activity name, description, start date, location, and purpose. This helps the government determine if your activities are genuinely charitable.
Submitting your application:
Once you’ve gathered all the necessary documents, you can submit your application online. The process varies depending on whether you’re applying for the first time or reapplying after a previous denial.
4. Application Review Process:
Review for Completion:
The government will first check to ensure your application is complete. If it is, they’ll assign it to an officer for review. If not, they may request additional information from you.
Review for Registration Status:
During this step, an officer will review your application to ensure your organization’s purposes and activities are genuinely charitable. If approved, you’ll receive notice of your registration status and any accompanying responsibilities.
Appeals:
If your application is denied, you have the right to appeal the decision within a certain timeframe. However, failing to provide the requested information may result in your file being closed, making an appeal impossible.
5. Dissolving your Registration:
Consequences of Charity Dissolution:
If you decide to dissolve your charity and not-for-profit status, you’ll lose certain privileges, such as tax exemptions and the ability to issue official donation receipts. You’ll also need to transfer any remaining assets to eligible recipients.
Registering a charity in Canada is a significant step toward making a positive impact on your community. By understanding the process and requirements involved, you can ensure your organization operates effectively and fulfills its charitable mission.
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Getting Started
- Review your existing books for needed corrections or back-work
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Ongoing Monthly Bookkeeping
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What We Don’t Do
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Payroll tax responsibility
Our bookkeepers can assist you in setting up your initial payroll service in QBO or Gusto. We are not responsible for entering payroll hours/salary, accruing payroll taxes, nor the transmittal of payroll taxes to the IRS or the state. Your full-service payroll provider (QBO, Gusto, or whatever other service a client uses) will be the responsible party for payroll and payroll tax compliance.
*Payroll deductions and benefits
We provide assistance with setting up a payroll account in either Quickbooks Online or Gusto, including entry of employee data. We do not assist in state registrations, benefits, or advise on deductions. Those service areas are provided directly by either QBO or Gusto.
Preparation of W2s
Similar to the last item, your full-service payroll provider (QBO/Gusto) is responsible for preparation of Form W2 for employees.
Sales tax reporting
For those nonprofits that sell taxable goods and/or services, your bookkeeper will assist in accounting for sales taxes collected and transmitted, but we do not prepare state sales tax reports.
Donation recording
We do not provide individual donation data entry into your neither your donor CRM nor Quickbooks Online, nor do we prepare year-end donor acknowledgements.
Administrative tasks
We cannot provide administrative services unrelated to our bookkeeping function.
Attend board meetings
Due to the constraints of time and distance, we are unable to be present, physically nor virtually, at a meeting of a client’s board of directors.*May incur additional fee per 1099-NEC or 1099-MISC.
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Northfield & Associates International Corporation is a global consulting firm serving private enterprises, public institutions, not-for-profit organizations, and institutional capital providers. Operating across Cambodia, Canada, and global markets, the firm supports capital deployment, regulatory navigation, and enterprise decision-making in complex economic and geopolitical environments. Northfield & Associates delivers customized, execution-focused advisory solutions that drive measurable transformation, strengthen competitiveness, and enhance long-term highest value opportunities. The firm incorporates consulting, legal, regulatory, financial, and risk expertise to enable disciplined capital allocation, strong governance, and operational resilience. Northfield & Associates upholds a culture of applied insight and innovation, supporting clients across digital transformation, growth strategy, and organizational capability building. The firm advises individual, leading global corporations, midsize enterprises, government agencies, and mission-driven organizations through long-term partnerships. Enterprise-wide risk management, professional ethics, and fiduciary standards are embedded across all operations. Northfield & Associates’ diverse, globally unified teams are committed to execution certainty and sustainable, risk-adjusted returns aligned with ESG and stakeholder objectives.
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