INCORPORATING AND REGISTERING A CHARITY MAY 2014 PART 1: THE DIFFERENCE BETWEEN A REGISTERED CHARITY AND NON-PROFIT ORGANIZATION CA COMMUNITY AMBASSADORS 1 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 Be aware that there may have been subsequent changes which make the information outdated.

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 2

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. 3

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 4

PART 1 5 THE DIFFERENCE BETWEEN A REGISTERED CHARITY AND NON-PROFIT ORGANIZATION

DEFINITIONS: PRIMARY DIFFERENCES 6 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.

DEFINITIONS: PRIMARY DIFFERENCES 7 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

DEFINITIONS: SUMMARY 8 Definitions | Requirements | Incorporating | Registering as a Charity | Compliance | Resources Registered charityNPO Purposesmust 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 Registrationmust apply to the Canada Revenue Agency (CRA) and be approved for registration as a charity no registration process for income tax purposes Charitable registration numberis issued a charitable registration number upon approval by the CRAregistration number is not issued a charitable registration number Tax receiptscan 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 doneesqualified donees not applicable Designationis designated by the CRA as a charitable organization, a public foundation, or a private foundation does not receive a designation Returnsmust 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 memberscannot use its income to personally benefit its members Tax exempt statusis exempt from paying income taxis generally exempt from paying income tax may be taxable on property income or on capital gains

SHOULD OUR ORGANIZATION BECOME A REGISTERED CHARITY: THE PROS AND CONS 9 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

RESOURCES 10 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

THE END OF PART Definitions | Requirements | Incorporating | Registering as a Charity | Compliance | Resources