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Incorporation and Non-profits

Overview


A non-profit is an organization that uses surplus revenues to achieve its goals, rather than distributing them as profit or dividends.

They can be non-incorporated like an artist collective.

Or they can be incorporated through the Ministry of Government and Consumer Services. Incorporated non-profits must have a board of directors, with articles and bylaws to govern themselves. When they are incorporated we call non-profits societies.

Charitable Status

Non-profits may also choose to obtain Charitable Status which is granted by the Canada Revenue Agency (CRA) upon application by a nonprofit; charities are allowed to issue income tax receipts to donors, must spend a certain percentage of their assets (including cash, investments and fixed assets) and file annual reports in order to maintain their charitable status.

The Canada Revenue Agency (CRA) assesses eligibility for registration as a charity under the Income Tax Act using a two‑part test to determine whether an organization:

  • is constituted for purposes that are exclusively charitable and define the scope of activities that can be engaged in by the organization; and
  • subject to limited exceptions, devotes its resources to charitable activities that further those purposes.

To be eligible, a purpose should generally identify three elements either expressly or implicitly through its context:

  • the charitable purpose category:
    • relief of poverty,
    • advancement of education,
    • advancement of religion,
    • or certain other purposes beneficial to the community in a way the law regards as charitable;
  • the means of providing the charitable benefit; and
  • the eligible beneficiary group.


Steps to Incorporating

Articles and Bylaws

All non-profits require articles which state the purposes or mandate of the organization. The CRA publishes a list of potential purposes which are also considered charitable. These can be found here http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cgd/rts-ctvts-eng.html Purposes can be put in whatever wording you chose.

Board of Directors

To incorporate you need a minimum of three board members.

Resources for Incorporation

Society Requirements

Each society is required to have:

Register of members and directors

This is a list of all the names and addresses of the board of directors and members of the society.

Minutes

This is written documentation of any meetings held by the society.

Accounting Records

Every society must keep a record of the money received and spent. Many also produce financial statements.

Letters of patent, bylaws, special resolutions

A copy of the letters of patent, issued when the application to becoming a society is approved. As well as a copy of the original bylaws and any subsequent special resolutions that changed those bylaws.

Society Filing Requirements

Annually a society must submit the following

CRA T2

With CIAAR (s546)

T4/T4A

GST/HST

Collecting GST/HST is only required for a society offering goods and services over $30,000 annually. However all society may apply to have their GST/HST rebate.

Society Requirements

Annual Meeting

Each society is required to have one annual meeting of the members.

Members

Societies must have members, these members vote on who the board of directors are. However each society may determine on their own who those members are and what conditions there are to membership. Members may also be required to pay dues.

Resources for Boards:

http://www.torontoartsfoundation.org/knowledge/creative-champions-network/resources

Other Resources

Law Help Interactive - this site allows you to prepare legal documents, find and prepare forms, and more all in one place! Can also be helpful to look at when thinking about incorporating and understanding what you need.