If your nonprofit is incorporated, you must file a T2 (Corporation Income Tax Return), even if you don’t have any income or owe any tax. If your nonprofit organization is not incorporated, it only needs to file an information return if it meets any of the following criteria:
- The organization earned more than $10,000 in dividends, interest, rental income, or royalties during the tax year.
- The organization had more than $200,000 in assets at the end of the last fiscal period.
- The organization had to file an information return last year.
If your organization meets any of those criteria, you need to complete Form 1044 (Non-Profit Organization Information Return) and submit it to the Canada Revenue Agency. This form requests details on how much money your organization received through the year from membership dues, dividends, sales, gifts, and other sources. It also requests a list of your organization’s assets and their values as well as your organization’s liabilities. Luckily, the form is only two pages so it doesn’t take long to complete if you have the right information on hand.
To ensure you have access to the numbers you need, you may want to use accounting software, and in particular, use software tailored for not for-profit organizations.
It’s important to note that charities and nonprofits fall into different categories under CRA regulations. Charities, such as amateur athletic associations and registered arts service organizations, do not need to complete information returns. Additionally, nonprofit corporations that provide low-cost housing for elders do not need to submit information returns, regardless of how much rent they collect.
Submitting these tax forms is critical if you want your organization to stay legally compliant. Beyond that, financial transparency can help to attract donors and volunteers.