Registered charity vs. non-profit organization
Registered charities are often referred to as non-profit organizations (NPOs). However, while both types of organizations operate on a non-profit basis, the two types are defined differently under the Income Tax Act.
Topics | Registered charity | NPO |
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Purposes |
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Registration |
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Charitable registration number |
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Tax receipts |
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Spending requirement (disbursement quota) |
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Designation |
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Returns |
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Personal benefits to members |
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Tax exempt status |
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Examples of registered charities
Examples under the four categories of charity generally include:
- relief of poverty (food banks, soup kitchens, low-cost housing units)
- advancement of education (colleges, universities, research institutes)
- advancement of religion (places of worship, missionary organizations)
- purposes beneficial to the community (animal shelters, libraries, volunteer fire departments)
Note
A charity must apply for charitable registration with the CRA if the charity wants to become exempt from paying income tax and/or to issue official donation receipts. Meeting the definition of a 'charity' (without registration) does not qualify an organization for these advantages.
Examples of non-profit organizations
Generally these include:
- social, recreational or hobby groups (bridge clubs, curling clubs, golf clubs)
- certain amateur sports organizations (hockey associations, baseball leagues, soccer leagues)
- certain festival organizations (parades, seasonal celebrations)
Note
If an organization meets the definition of a 'charity', it cannot be considered a non-profit organization under the Income Tax Act, even if the organization is not registered or cannot be registered as a charity. An organization may meet one definition or the other, but not both.
The CRA tax services offices are responsible for determining if an organization qualifies for tax-exempt status as a non-profit organization.
References
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