You may be doing the phenomenal job of running a charity. With so much to do, you may fall behind on the requirement to file form T3010 with CRA. So, is that a big deal? Sadly yes!
In Canada, a registered charity does not have to pay income tax. It is, however, required to submit the T3010 Registered Charity Information Return to CRA every year.
Due Date for Filing T3010
It is mandatory for a charity to file T3010 within six months of the end of its fiscal year. For example, if your charity’s fiscal year-end is March 31, it should file T3010 by September 30.
Please note that, as a COVID-relief measure, the deadline for filing T3010 has been extended to December 31, 2020 for charities that were required to file T3010 between March 18, 2020 and December 31, 2020. As such, if your charity has been filing T3010 by September 30 every year, based on its fiscal year-end of March 31, it can avail the extended deadline for filing T3010 by December 31 of this year.
Why File T3010?
There are multiple reasons for filing T3010. Let’s have a quick look at some of them.
1. It’s a legal requirement under the Canadian Income Tax Act for a charity to file T3010. You would not want to be non-compliant with the law.
2. In case you are unable to file T3010 by the due date, you are at risk of losing the charitable status. As per CRA, failure to file T3010 is the most common reason for revocation of charity registration.
If a charity’s registration is cancelled, it loses the privileges associated with the charitable status. Upon revocation, the organization is no longer able to claim income tax exemption as a registered charity, issue donation tax receipts, obtain rebate for GST/HST payments or claim refund of property taxes (in Ontario only). It also becomes disqualified for government grants available to registered charities. There is also the reputational risk to consider since the name of charity and the reason for revocation of its registration are publicly available on the CRA website.
If you apply for re-registration of your charity, you have to pay a late filing penalty of $500 as well as file the missing T3010s with CRA (so much for not filing them in the first place!). Re-registering as a charity usually involves more hard work than the initial registration. You will need to submit the registration application and all supporting documents to CRA, in compliance with the regulations currently in place. Very often, this requires changing the former objects and activities of the charity to meet the current CRA requirements.
Despite your best efforts, you may not be able to re-register. If a former charity is not re-registered within one year of revocation, it will be required to donate its assets to another charity. Otherwise, it will have to pay a revocation tax at 100% of the market value of its property remaining after payment of its liabilities.
3. Besides the compliance requirements, filing T3010 has an upside for charities. Details from T3010 are publicly available on CRA’s website. From here, donors can access a charity’s information and make informed funding decisions. In fact, information from T3010s across the charitable sector is collated by organizations like CanadaHelps to provide a central platform where donors can read about different charities, compare their performance and accordingly give to the charity of their choice.
4. Filing T3010 is so much more than disclosing the charity’s financial information. It gives you the opportunity to make a pitch to prospective donors and educate your supporters, the media and other stakeholders by describing the charity’s ongoing and new programs in relevant section of T3010. So, if you have not filed T3010 or not doing a good enough job in filling in its various sections, you are missing out on fundraising opportunities.
How to File T3010?
Since June 1, 2019, charities can file T3010 using online services of CRA. Otherwise, the paper option remains whereby you can mail the completed charity return to the Charities Directorate of CRA.
Along with filing T3010, you have to prepare and submit the charity’s financial statements (even if the charity was not active during the year) and details of the charity’s directors/trustees and its officers. If the charity’s income for the year is over $250,000, CRA recommends that audited financial statements should be submitted. Other forms may also be applicable, as the case may be, including provincial annual returns. If the charity is a corporation, there is no need to file the T2 corporate tax return for as long as it has charitable status.
Things to Keep in Mind While Filing Charity Return
For your convenience, here are certain aspects to bear in mind while filing T3010.
- Mark the due date and be sure not to miss it
- Prepare a complete return, including all applicable forms
- Include financial statements (audited, if applicable) for the same fiscal year as the T3010
- Provide details of directors, trustees and officers of the charity
- Describe charitable activities that are current and relevant
- Where applicable, include registration number of qualified donees
- Ensure that the return has been signed
- Remember to file the charity return even if the charity was inactive during the year
We are a CPA firm in downtown Toronto that provides tax, accounting, corporate and advisory services to businesses. We would be happy to answer any questions that you may have.