While it’s tempting to think of charities as small and disorganized, nothing could be further from the truth. In Canada, there are approximately 85,000 charitable organizations registered with the Canada Revenue Agency, and they represent a significant amount of the country’s economic activity. The CRA recognizes this and devotes important resources to the charitable organization industry as a result.
The Charities Subprogram
The CRA is a vast and complex agency divided into various sectors, or programs. These programs are then subdivided into units known as subprograms. One of the most important programs is the Taxpayer and Business Assistance program, which is charged with giving taxpayers information necessary for compliance with Canada’s complex tax laws. Within this program, the Charities Subprogram is responsible for administering the national registration program for charities, Canadian amateur athletic associations, and national arts service organizations. It’s important to understand the special role of registered charities within the tax system: registered charities can issue tax receipts for the donations they receive, so they can actually reduce the income tax payable for their donors. In light of this, the CRA makes compliance with the laws for charitable organizations a high priority. A prime example is the audit and review of all charities’ annual returns. This CRA analyzes each charity’s detailed activities to confirm they’re engaging in qualifying activities and not using their resources for non-compliant activities such as partisan politics.
CRA Plans for the Future
The CRA has published its business plan for the years 2016 to 2018 inclusively. In it, the agency details its plans for changes and improvements to its programs and subprograms. The Charities Subprogram portion of the business plan proposes two main changes. The first is broad-reaching policy change, and the second, technological adaptation of its day-to-day work with charities. The CRA recognizes charities can play a valuable role in society and contribute to public debate and public policy. In doing this, charities often engage in political action. As current rules stand, charities can only devote a very limited portion of their resources to politics, even if they sincerely believe it furthers their causes. Recognizing this, the CRA has indicated it plans to review and clarify the rules governing a registered charity’s involvement in political activities in collaboration with the charitable sector. As noted above, charities play an important part in the Canadian economy. The CRA has said that Canadians donate billions of dollars each year to support registered charities, and they expect those charities to use their donations to benefit the intended causes. The CRA wants to ensure compliance and intends to make it easier for charities to register for charitable status and file their annual returns. To modernize the current system, the CRA has undertaken to improve its use of technology. Specifically, it plans on accepting online applications for charitable registration starting in November 2017. It also intends to make electronic filing available for the annual Registered Charity Information Return (T3010) in November 2018. Canada’s tax laws and regulations are constantly evolving, and the charitable sector is no exception. By making better use of technology, the CRA hopes charitable organizations can more easily comply with their obligations, allowing them to focus more time and energy to their causes.