The CRA in May 2015 updated their guide Registering a Charity for Income Tax Purposes T4063(E). The Guide is the main source of information from CRA to assist the public with charity applications. The main change between the 2013 version of the Guide and the 2015 version of the Guide is how CRA treats draft applications for charitable status. Here is a redlined comparison of Registering a Charity for Income Tax Purposes T4063(E) comparing 2015 to 2013.
Here is the revised section and I have bolded the new wording
Will the Charities Directorate accept draft governing documents?
The Directorate will review draft governing documents on a one-time basis, but only if they are submitted with a complete application that includes all required documentation.
If we determine that an organization is likely to qualify for registration, we will ask the organization to provide certified copies of the governing documents within 60 days. If we do not receive the documents within 60 days, the application will be closed without any further contact from us.
If we determine that the organization is not likely to qualify for registration, we will send a letter of opinion indicating that the organization is not likely to qualify and we will provide our reasoning. The file will then be closed and there will be no further contact from us. Draft governing documents and draft purposes are not subject to a final decision, since a determination can only be made when we receive a copy of an organization’s certified governing documents. Our decision to close a file is not subject to appeal, since the organization is not a legal entity and was not officially denied registration. An organization may, after receiving our letter of opinion, send a formal application that includes its certified governing documents.
In the past we would generally try to file applications with draft governing documents to provide CRA an opportunity to suggest changes to the governing documents, especially the objects. This avoided situations where further corporate amendments would have to be made since the documents being provided were only draft documents. The above change which took effect in December of 2014 effectively makes it far less desirable to submit draft applications because if CRA has any concerns with the application (and they typically do except for the simplest applications) they will advise you of the concerns in a letter of opinion and then close the file and will not give you any opportunity to respond to the concerns. At that point, if the applicant still wants charitable status they will have no other choice but to reapply and wait another 3-6 months for CRA to review the new application. Therefore in general, groups seeking charitable status will likely be better off (especially when faced with a significant delay from CRA for reviewing charity applications) to first incorporate and then file the charity application and then, if necessary depending on CRA's feedback, make the required corporate changes by filing articles of amendment to accommodate any changes that CRA requires.
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
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.