Not-for-Profit Organization Changes

Not-for-Profit Organization Changes

Draft legislation by the Department of Finance released earlier this year will require non-profit organizations (NPO’s), who may not have been previously required, to file a T1044. This change will apply to fiscal years that begin on or after January 1, 2027.

Currently a NPO is required to file a T1044 with their corporate tax return if:

• Received taxable dividends, interest, rental income, and royalties over $10,000;
• Owned assets with a value that exceeds $200,000 at the end of the previous fiscal period; or
• Was required to file a T1044 in a previous fiscal year.

Under the proposed legislation, a requirement is being added:

• Total amounts received during the fiscal year, including capital receipts, exceeds $100,000.

In addition, any NPO that did not meet the above criteria for filing a T1044 will be required to file a new short-form return, except:

• Those organizations whose total receipts for the fiscal year were under $10,000;
• Groups are not considered an “organization”; or
• Organizations that were required to file a long form T1044.

If an NPO is considered an organization will be a question of fact, consider if there are bylaws or a constitution, if there is an organizational structure or hierarchy, or if there are defined governance roles. Loosely organized recreational activities would generally not be considered an organization.

In order to prepare for these changes, NPO’s should:

• Prepare a brief description of the NPO’s activities, including where they operate from;
• Calculate the total amount of annual receipts, assets, and liabilities;
• Gather names of directors, officers, trustees, or similar officials.

T1044’s are due 6 months after an organization’s fiscal yearend, they cannot be electronically transmitted and must be mailed in to CRA. Currently there is a penalty of $25 per day to a max of $2,500 for each late filed T1044.

These changes do no impact registered charities as they have different filing requirements.

As this is proposed legislation currently, there is no new T1044 been made available yet.