Accounting for Law

Charities: file returns or face losing charitable status

News that the Canada Revenue Agency (CRA) has revoked the charitable status of a New Brunswick non-profit underscores how vital it is for charities to file annual information returns with the agency, says Toronto tax litigation lawyer David J. Rotfleisch.

As Global News reports, the Joshua Group has been providing food, clothing and activities for children in low-income households in Saint John for seven years, but had its charitable status revoked in July, as a result of failure to file an information return with the CRA. According to the agency’s website, the charity last filed a return at the end of 2012.

“The CRA is reluctant to cancel the charitable status of registered charities, but will do so if the organization fails to file its annual information return,” says Rotfleisch, founding tax lawyer at Rotfleisch & Samulovitch Professional Corporation.

As the CRA website explains, registered charities are required to fill out a ‘T3010 Registered Charity Information Return’ form annually, to report activities, sources of revenue, and expenditures. A charity is obligated to send the form to the agency within six months of the end of its fiscal period, along with a copy of its financial statements. As the CRA notes, if a charity's financial statements are not included, “its registration may be revoked.”

If it fails to file its annual information return, Rotfleish says the CRA will warn the charity and give them time to comply, but ultimately their status will be revoked. 

“The charity will then need to file the missing returns and complete a new application to obtain charitable status,” says Rotfleisch.

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