Summary Policy

Date
September 3, 2003 (Revised September 13, 2005)

Reference Number
CSP - D10

Key Words
Director / Trustee

Policy Statement

Directors / trustees and like officials are persons who govern a registered charity. These persons hold positions that are usually identified in an organization's governing document (e.g., president, treasurer and secretary).

Provincial law determines the circumstances under which a registered charity's directors / trustees can receive compensation. In general, a registered charity cannot pay its directors / trustees simply for occupying their positions. However, some provinces permit a charity to have governing documents allowing for reasonable compensation for services that directors / trustees provide to the charity (e.g., the director is an employee).

Under the Income Tax Act, a registered charity that confers on a director / trustee an undue benefit is liable to a penalty equal to 105% of the amount of the benefit. This penalty increases to 110% and the suspension of tax-receipting privileges for a repeat infraction within 5 years.

References

• Arm's Length, CSP - A07.
• Governing Document, CSP - G06.
• Financial Penalties, CSP-F17.
• Sanctions, CSP-S17.
• Suspension, CSP-S18.
• Undue Benefits, CSP-U02.
• Director / Trustee, CIL-1993-003, CIL-1993-008, CIL-1993-009, CIL-1995-002, CIL-1996-011, CIL-1999-007.
• Completing the Registered Charity Information Return, T4033A.
• Registering a Charity for Income Tax Purposes, T4063.
• Income Tax Act, R.S.C. 1985 (5th supp.) c. 1, ss. 188.1(4), (5) and para. 188.2(1)(b).