The CRA has published its Guidance CG-028 Head bodies and their internal divisions on September 22, 2017. It discusses what is a head body and what is an internal division and what CRA will require for registration as a charity. This guidance will be helpful not only for charity applications by internal divisions but also for head bodies and internal divisions in clarifying their requirements after registration. This guidance is not relevant to most charity applications where there is a corporation or group that is not an internal division of a registered charity. CRA published another note saying that they will be mailing to all internal divisions separate business numbers so they can access the CRA's My Business Account portal. Such access will be important for charities when they are doing electronic filings, which is anticipated to come into place in October 2018.
The term internal division is not defined under the Act. However for the purpose of this guidance, we consider an internal division to be a branch, section, parish, congregation or other division of a registered charity that is established in Canada and that receives donations on its own behalf. It operates as an extension of and under the authority of the head body and it must further the charitable purpose of the head body. It is not a legal entity in its own right and does not have its own governing documents, but instead operates under the governing document of its head body. An internal division is registered separately with the CRA from its head body but remains in a subordinate position to the head body. It has its own charitable number.
The CRA also notes under requirements after charitable registration:
- Head bodies and internal divisions all have to file their own Form T3010, Registered Charity Information Return, and financial statements every year.
- An internal division must have the same fiscal year-end as its head body.
- The head body must maintain its registered status for its internal division to retain its registered status.
- The registration number that the CRA issues must be included on all official donation receipts and on all T3010 forms that are filed.
- Head bodies must inform the Charities Directorate of any changes to their mode of operations or legal structure. This includes changes in address, directors, legal or operating name, purposes, activities or governing documents.
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Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.