How to create a registered charity in Ontario

Q: I want to give back to my community. Should I create a registered charity?

A: To register a charity under the Income Tax Act, an organization must have purposes that are exclusively charitable at law, being one of (1) relief of poverty, (2) advancement of education, (3) advancement of religion, or (4) other purposes beneficial to the community.

If your organization forwards one of the above charitable purposes, you may want to consider filing a Charitable Status Application to the CRA. There are various advantages to becoming a charity, including (1) the ability to issue official donation receipts for donations or gifts, (2) being exempt from paying income tax, (3) being eligible to receive gifts from registered charities, and (4) numerous exemptions on GST and HST for certain goods or services you may provide. Additionally, you may be eligible for exemptions on the provincial level, such as the exemption on Land Transfer Tax for registered charities who gift other charities real property in Ontario.

However, charities have several obligations. You must use your organization’s funds towards forwarding your charitable purposes, ensure direction and control over funds, file annual information returns to the CRA, and meet your annual spending requirement. You also have a heightened requirement to keep reliable and complete financial records, including the added responsibility of ensuring your official donation receipts are complete and accurate. Finally, neither Directors nor persons such as family members are permitted to be compensated for acting in their capacity as Director, or for any services they may provide to the charity, such as contractor or accounting work.

If you are interested in creating a registered charity, reach out to Jarrett for assistance.

This article was originally published by The Hamilton Spectator.