Top 10 Canadian Charity Compliance Issues

Q. As a newly appointed Director of a Charity, your role is crucial in maintaining compliance with the CRA Charities Directorate. What are the key compliance issues that demand your attention?

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A. The top 10 Compliance issues the CRA repeatedly focuses on are:

1. Incorrect issuance of Receipts;
2. Failure to file the annual T3010 return;
3. T3010 errors and omissions;
4. Undertaking non-charitable activities;
5. Gifts to Non-Qualified Donees;
6. Failure to maintain Direction and Control of activities operating in foreign jurisdictions;
7. Unreasonable fundraising costs;
8. Involvement in partisan political activities;
9. Unrelated business activities;
10. Inflated tax receipts related to Religious Tuition.

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One of the charities' most common compliance issues is the incorrect issuance of receipts. Charities must issue receipts for donations of $20 or more, but they must comply with CRA guidelines. Please do so to avoid the revocation of charitable status.

Another common issue is the failure to file the annual T3010 return. This document provides the CRA with information on a charity's activities, governance, and finances. Failure to file this return may result in penalties and loss of charitable status.

Charities must also be aware of errors and omissions on their T3010 return. The CRA may review a charity's return and request additional information or clarification. Failure to provide accurate and complete information may result in penalties or loss of charitable status.

Undertaking non-charitable activities may also put a charity's status at risk. Charities are required to use their resources for charitable purposes only. Engaging in non-charitable activities may result in the loss of charitable status.

Gifts to non-qualified donees, such as individuals or organizations outside of Canada, may also risk a charity's status. Charities must ensure they only make gifts to qualified donees as defined by the Income Tax Act.

Charities must also maintain direction and control of activities operating in foreign jurisdictions. Failure to do so may result in the loss of charitable status.

Unreasonable fundraising costs, involvement in partisan political activities, unrelated business activities, and inflated tax receipts related to religious tuition are other compliance issues that charities must be aware of.

In conclusion, understanding and maintaining compliance with CRA regulations is essential for charities to support their charitable status and continue to make a difference in their communities. As a Director of a Canadian charity, it is necessary to prioritize compliance and ensure that your charity is meeting all CRA requirements.