What is a Canadian Registered Charity?

Becoming a registered charity in Canada is a significant step for nonprofit organizations. This article aims to provide comprehensive information about registered charities and how to maintain their charitable status. In this guide, we will cover the following topics:

1. Being a Registered Charity
2. Benefits of Registration
3. Compliance with the Income Tax Act
4. Obligations and Requirements
5. Determining Your Charity’s Status
6. Being a Registered Charity
   

In Canada, there are over 170,000 charitable and nonprofit organizations, with approximately 86,000 being registered charities recognized by the Canada Revenue Agency (CRA) as of 2018. To achieve this status, these organizations have undergone a rigorous application process and received approval from the CRA.

Each registered charity is assigned a unique Business Number (BN) composed of fifteen digits ending with RR0001. For example, a registered charity may have a BN like 123456789RR0001.

Benefits of Registration

Registered charities in Canada enjoy two significant benefits:

1. Official Tax Receipts: Registered charities have the authority to issue official tax receipts for gifts or donations received. These receipts are crucial for donors as they can use them in their income tax returns, providing an incentive for charitable giving.
2. Income Tax Exemption: Registered charities are not required to pay income tax according to the provisions outlined in Part 1 of the Income Tax Act.

Compliance with the Income Tax Act

Registered charities must adhere to the requirements outlined in the Income Tax Act. The Charities Directorate of the Canada Revenue Agency is responsible for administering the provisions of the Act for registered charities and supervising their activities to ensure adherence to regulations.

Additionally, registered charities must also meet the requirements set forth by their respective provincial legislations, including maintaining their legal status as charitable organizations.

Determining Your Charity’s Status

If you are uncertain about whether your organization holds registered charity status, there are a few steps you can take:

Check your Business Number: A typical Registered Charity Business Number ends with RR0001. For example, a registered charity's BN might look like 987654321RR001.

Review Official Documents: Look for your Notification of Registration letter from the CRA or your Annual Information Returns, which can confirm your registered charity status.

Use the CRA Charitable Organization Registry: The CRA offers an online search tool enabling you to confirm the charitable status of an organization. 

The information presented in this module is intended for general educational purposes and should not be considered legal or accounting advice. For professional guidance, it is recommended to consult a charity lawyer. 

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