CRA recently put out a short press release on its Non-Profit Organization Risk Identification Project. This project applies to non-profits who are not registered charities under the Income Tax Act. CRA is looking at whether these non-profits are acting within the rules governing non-profits. In some cases some non-profits have received education letters from the CRA. Unfortunately, CRA is not allowed to identify which organizations are non-profits and we understand there are about 80,000 - 100,000 of them. I have made submissions to the Finance Committee that s. 241 of the Income Tax Act should be amended to allow CRA to disclose certain basic information about non-profits (as it can do with registered charities).
Here is the CRA Release:
“Non-Profit Organization Risk Identification Project
The Canada Revenue Agency (CRA) is committed to supporting a strong non-profit sector.
As part of this commitment, the CRA is in the third and final year of a research project related to tax compliance in the non-profit sector.
The information gathered will help to provide insights regarding the way non-profit organizations (NPOs) operate under the provisions of the Income Tax Act (ITA).
It is important to note that the ITA contains rules that govern how NPOs may operate, so that there is a level playing field for all. Any organization seeking the benefits of NPO status must follow these rules.
In general, an organization will be a tax-exempt NPO if it is not a charity but is organized exclusively for social welfare, civic improvement, pleasure or recreation, or for any other purpose except profit, and does not make its income available for the personal benefit of members.
Some NPOs have received an education letter as part of CRA’s research project to help raise awareness of the rules governing the tax exemption that is available to them.
If an NPO is unclear about the purpose of the education letter, they should contact the Director of their local tax services office for further information.
The CRA is committed to ensuring that all NPOs have the information and tools available to comply with tax laws fully and on time, and that they receive any benefits they are entitled to receive.
The CRA encourages you to learn more about NPOs at http://www.cra-arc.gc.ca/tx/nnprft/menu-eng.html
Title: CRA - Non-Profit Organization Risk Identification Project
Date Posted: 08/03/2012 11:53
Areas of Interest: Federal Income Tax
Document Source(s): Canada Revenue Agency
Subject Area(s): Administration and Enforcement, Compliance, Information disclosure
Subject: Income Tax (Federal)
Jurisdiction: Federal “
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.