Top facts about the regulation of charities

Dec 13th, 2018 | By | Category: Finance, Leave a Legacy

By The Canada Revenue Agency

Charities play an important role in our society and provide valuable services to Canadians – including the most vulnerable. That is why the Government of Canada supports charities through unique tax privileges, such as an exemption from income tax and the ability to issue official donation receipts and receive gifts from other registered charities.

The Canada Revenue Agency (CRA) registers charities in Canada, and makes sure they continue to comply with the requirements of the Income Tax Act and common law. The CRA has a responsibility to protect the integrity of the tax system and the charitable sector, and fulfills this responsibility through a balanced program of education, client service, and responsible enforcement.

Top things to know about the regulation of the charitable sector in Canada

There are more than 86,000 registered charities in Canada, each carrying out activities in support of one or more of the four recognized categories of  charity – poverty, education, religion, and other purposes beneficial to the community.

The Government of Canada understands that registered charities are an important part of Canadian society, and it encourages Canadians to donate generously through the charitable donations tax credit and initiatives such as the first-time donor’s super credit.

The CRA offers donors a wide range of resources on a variety of topics to help them make informed donation decisions. This includes information and videos on how to choose the right charity, as well as the Charities Listings database and search tool.

The CRA regularly consults with representatives of the charitable sector through meetings, surveys, focus groups, and other methods to make sure its programs keep pace with the evolving needs of registered charities.

To reduce the administrative burden on charities, Budget 2014 provided $23 million in funding for the CRA to modernize its information technology systems. The modernization, to be completed no later than March 31, 2019, will let charities apply for registration and file their annual information returns electronically. As a result, charities will spend less time and resources on administration and have more time and resources for their charitable activities.

To protect the integrity of the charitable sector, the CRA audits about 1% of all registered charities (about 800–900 charities) across Canada each year. This is a coverage rate similar to that of most other CRA audit programs. Audits help the CRA make sure registered charities are using their resources, including donations from Canadians, according to the rules.

Fairness is the cornerstone of the CRA’s audit program. If the CRA identifies non-compliance as a result of an audit, it uses an education-first approach where possible. This means the CRA will generally give a charity the chance to correct its non-compliance through education or a compliance agreement before it resorts to other measures such as sanctions or revocation. The majority of charities selected for audit are able to continue their charitable work.

The CRA has made significant investments in education and outreach for all charities to help them understand and follow the rules on political activities. As announced in Budget 2016, the CRA is collaborating with the Department of Finance to consult with charities and the public with a view to clarifying the rules governing political activities, as well as developing new guidance and educational resources for charities on this topic. For more information go to The Canada Revenue Agency’s online consultation on charities’ political activities.

To protect and maintain public confidence in the charitable sector, the CRA makes sure the tax benefits reserved for Canada’s charities are not used to support terrorism. To that end, the CRA has an important role in combating the financing of terrorism in support of the Charities Registration (Security Information) Act. The CRA also provides educational resources to charities to help them avoid terrorist abuse.

For more information visit

Leave a Comment