Registered Charity Vs. Non-Profit Organization

Fast Facts

Registered Charity vs. Non-Profit Organization

Registered charities are often referred to as non-profit organizations (NPOs). However, while both types of organizations operate on a non-profit basis, the two types are defined differently under theIncome Tax Act.

Topics Registered Charity NPO

Must be established and operate • Can operate for social welfare, civic exclusively for charitable purposes improvement, pleasure, sport, recreation, or any Purposes • relief of poverty other purpose except profit. • advancement of education • Cannot operate exclusively for charitable • advancement of religion purposes. • purposes beneficial to the community

Must apply to the Canada Revenue No registration process for income tax Registration Agency (CRA) and be approved for purposes. registration as a charity.

Charitable Is issued a charitable registration Is not issued a charitable registration number. Registration Number number upon approval by the CRA

Can issue official donation receipts Cannot issue official donation receipts for Tax Receipts for income tax purposes. income tax purposes.

Must spend a minimum amount on its Spending Requirement own charitable activities or as gifts Not applicable (Disbursement Quota) to qualified donees.

Is designated by the CRA as a Designation charitable organization, a public Does not receive a designation. foundation or a private foundation.

Must file annual information return May have to file a T2 return (if incorporated), Returns (Form T3010) within six months of its and/or an information return (Form T1044) fiscal period end. within six months of its fiscal period end.

Personal Benefits to Cannot use its income to personally Cannot use its income to personally benefit its Members benefit its members. members. • Is generally exempt from paying Tax Exempt Status Is exempt from paying income tax. income tax. • May be taxable on property income or on capital gains.

Adapted from CRA website: www.cra-arc.gc.ca/chrts-gvng/chrts/pplyng/rgstrtn/rght-eng.html

Production of this fact sheet has been made possible by a E: [email protected] financial contribution from the Canada Revenue Agency.