A non-profit corporation is a legal entity separate from its members and directors formed for purposes other than generating a profit to be distributed to its members, directors or officers. While, a non-profit corporation can earn a profit, the profit must be used to further the goals of the corporation rather than to pay dividends to its membership. Non-profit corporations are formed pursuant to federal or provincial law. A non-profit corporation can be a church or church association, school, charity, medical provider, activity clubs, volunteer services organization, professional association, research institute, museum, or in some cases a sports association. Non-profit corporations must apply for charitable status to benefit from tax-exempt status and to issue tax deductible receipts to donors.

Non-profit corporations are distinct from business corporations which are formed to make a profit and to distribute the profit to its shareholders. Business corporations are regulated by either federal or provincial laws. For more information on business incorporations, click here.

Incorporating gives an organization legal status. It is not essential for a non-profit corporation to incorporate. Whether an organization decides to incorporate or not depends upon its activities, nature, or type of organization.

As a legal entity, an incorporated association is recognized by the legal system as having rights and responsibilities. An incorporated organization can enter into contracts, buy land, borrow money, have bank accounts, etc., in its own name. Other advantages to incorporating may include:

• The liability of the members is limited (for example, members are not personally liable for debts of the corporation);
• Continuity of the organization is assured while the membership changes;
• A corporation can own property in its name regardless of membership change;
• The ability to bring a legal action in its own name (an unincorporated body cannot); and
• The chances of receiving government grants may increase because of the stability the organization appears to have.

An unincorporated association is an agreement between individuals, and generally has no legal status. The members may be personally liable to the creditors for the full amount of any debts. An unincorporated body cannot generally sue or be sued; members must sue or be sued personally. Title to property has to be in all the members’ names if the group is not incorporated. This can make selling the property difficult.

An organization may incorporate federally or provincially. This decision may be based on the location of the organization. If the organization is to carry on its activities in more than one province under the same corporate name and wishes to move its registered office around the country with ease, it may incorporate federally. A local organization that will remain in the community or province usually incorporates provincially. An organization that is incorporated federally may also be required to register provincially, depending on the nature of its activities in each province.

Following the selection and reservation of a corporate name, the next step is to file non-profit articles of incorporation (sometimes memorandum) with the proper government department. If you intend on applying for charitable status, it is important that the articles contain the required clauses to make sure your articles will qualify for charitable status (see below).

The corporation must comply with corporate formalities and hold annual meetings of directors and members. Bylaws must be adopted for the corporation. Documents that help you comply with these corporate formalities are contained in our packages.

One of the most important factors for any non-profit corporation when deciding to incorporate is the cost of incorporation. The jurisdiction of incorporation will automatically become criteria for decision because government fees are not the same.

Below are the current government incorporation fees for non-profit corporations in Canadian jurisdictions:

Jurisdiction	Government Fee
Federal	$250
Alberta	$75
British Columbia	$100
Manitoba	$100
Newfoundland	$70
New Brunswick	$62
Nova Scotia	$40
Ontario	$155
Quebec	$158
Saskatchewan	$65
Yukon Territory	$245

Moreover, if you are incorporating a federal corporation, you must also register extra-provincially. Currently, the extra-provincial registration fees for a federal corporation which has its registered office in that province are (these are in addition to the federal incorporation fee of $250 indicated above):

Province	Extra-provincial Registration Fee
Alberta	$220
British Columbia	$100
Manitoba	$100
Newfoundland	$260
New Brunswick	$100
Nova Scotia	$252
Northwest Territories	$100
Ontario	$100
Prince Edward Island	$250
Quebec	$34
Saskatchewan	$115
Yukon Territory	$30

This depends on the jurisdiction of incorporation. Below are the current government incorporation approximate delays for non-profit corporations in Canadian jurisdictions:

Jurisdiction	Standard Processing	Expedited Processing (Additional fees apply)
Federal	30 days	N/A
Alberta	10 days	5 days
British Columbia	40 days	20 days
Manitoba	30 days	15 days
Newfoundland	30 days	N/A
New Brunswick	30 days	15 days
Nova Scotia	30 days	N/A
Ontario	60 days	15 days
Quebec	26 days	12 days
Saskatchewan	30 days	15 days

Typically legislation requires at least 3 directors. Nova Scotia and British Columbia require 5 individuals. Only physical persons can be directors, no corporation may be a director.

Non-profit corporations must have a corporate name. The guidelines applying to business also apply to non-profit corporations. For help on how to select a name, please click here.

Depending on the jurisdiction the name may or may not require that it end with “Inc.”, “Incorporated”, ”Incorporée”, “Corp.” or “Corporation”.

The Canada Customs and Revenue Agency (CCRA) (formerly Revenue Canada) is the government department responsible for granting organizations charitable tax status. The process routinely takes 6 months to 18 months and requires applicants to fulfill a number of requirements. One of the major advantages of obtaining charitable status, is that the organization is able to issue receipts to donors for income tax purposes. This can be a major advantage when soliciting for donations. In addition, charities receive certain tax exemptions. If an organization is created in Canada, is non-profit and is charitable in purpose, it may qualify as a charity within the meaning of the Income Tax Act. A non-profit corporation cannot issue tax deductible receipt simply because it is a non-profit corporation. It must first submit an application and be accepted as having charitable status.

If you intend to apply to CCRA for charitable registration, we strongly suggest that you first contact CCRA first to confirm the use of the objects of your corporation. However, your organization’s use of proper objects is only part of Revenue Canada’s requirements for charitable registration. Revenue Canada must take other factors into consideration, including the activities and programs your organization undertakes to achieve its objects. For information on how to apply to Revenue Canada for charitable registration you may wish to contact your local Revenue Canada office which can be found in the blue pages of your telephone book or call the Charities Division in Ottawa at (613) 954-0410, Toll - Free 1-800-267-2384.

Below are relevant links to the CCRA web site:

Canada Customs and Revenue Agency (formerly Revenue Canada)

• Information For Charities

  • Application to register a charity under the Income Tax Act

• Charities Division Contact Information

  • Forms
  • List of Canadian Registered Charities

The Charities Directorate of the Canada Customs and Revenue Agency administers the Income Tax Act as it applies to registered charities. CCRA only grants charitable status to organizations where the (a) the applicant's purposes and activities fall within the legal concept of charity as recognized by the courts; and (b) the organization meets the other requirements of the Income Tax Act.

Please note that there are organizations in the community with worthwhile purposes that are not considered "charitable" by the courts. For example, organizations like non-profit social clubs and advocacy groups fall in this category. These groups do not qualify for registration.

What are charitable purposes?

The courts have identified four general categories of charitable purposes. For an organization to be registered, its purposes have to fall within one or more of the following categories:

• the relief of poverty;
• the advancement of education;
• the advancement of religion; or
• certain other purposes that benefit the community in a way the courts have said are charitable.

The application for registration you send to us should clearly show the way the organization will meet each of its charitable purposes. Thus, a purpose "to relieve poverty" is acceptable only if it is accompanied by a statement of activities indicating how the organization will accomplish this purpose. For example, the statement might say the organization will relieve poverty "by establishing a food bank, operated by volunteers, in rented premises on Maple Street. The food bank will receive gifts of food from retail stores and individual donors."

The relief of poverty

Organizations established for the relief of poverty include food banks, soup kitchens, as well as enterprises that supply low-cost rental housing, clothing, furniture, and appliances to the poor.

The advancement of education

The courts recognize a purpose or activity as advancing education in the charitable sense if it involves formal training of the mind or formal instruction, or if it prepares a person for a career, or if it improves a useful branch of human knowledge. Only providing information is not accepted by the courts as educational; training or instruction also have to be offered. The advancement of education includes:

• establishing and operating schools, colleges, universities, and other similar institutions;
• establishing academic chairs and lectureships;
• providing scholarships, bursaries, and prizes for scholastic achievement;
• undertaking research in a recognized field of knowledge (The research must be carried out for educational purposes and the results must be made available to the public.);
• advancing science and scientific institutions, including maintaining learned societies (Professional associations or other societies that primarily provide benefits to members are not considered charitable.); and
• providing and maintaining museums and public art galleries.

The courts have ruled that an activity which advances education should involve a full and fair presentation of the facts so people can draw their own conclusions. If an organization intends to influence the opinion or actions of the public toward one side of a controversial issue, it is not advancing education in the charitable sense. For this reason, an advocacy group would not qualify as a charity.

The advancement of religion

This category refers to promoting the spiritual teachings of a religious body, and maintaining the doctrines and spiritual observances on which those teachings are based. There has to be an element of theistic worship, which means the worship of a deity or deities in the spiritual sense. To foster a belief in proper morals or ethics alone is not enough to qualify as a charity under this category. A religious body is considered charitable when its activities serve religious purposes for the public good. The beliefs and practices cannot be what the courts consider subversive or immoral.

Other activities that advance religion include:

• organizing and providing religious instruction, and performing pastoral and missionary work; and
• establishing and maintaining buildings for worship and other religious use.

Purposes beneficial to the community

This category includes various purposes that do not fall within the other categories, but which the courts have decided are charitable. However, not all purposes that benefit the public are charitable. For example, a property-owners' association or community association might not qualify. Organizations that normally qualify as charitable include those with the following purposes:

• providing immediate relief to victims of natural disasters or sudden catastrophes (e.g., floods, earthquakes, and tornadoes);
• relieving suffering or disability caused by old age, which includes providing facilities for the care, maintenance, and rehabilitation of the elderly;
• preventing and relieving sickness and disability, both physical and mental (e.g., services performed by hospitals, clinics, nursing and convalescent homes, the provision of home care services and the establishment of workshops or other centres for disabled people);
• providing rental housing and related facilities for people with special needs (e.g., homes for disabled people);
• preserving the environment;
• protecting the welfare of children (e.g., societies for the prevention of child abuse);
• providing counselling services for people in distress;
• rehabilitating victims of substance abuse and preventing substance abuse;
• providing certain public amenities to benefit the community;
• establishing safety rescue operations or a volunteer fire department; and
• establishing humane societies, animal shelters, and similar institutions to prevent cruelty to animals.

There are a number of administrative requirements, such as filing a Notice of Registered Office if there is a change and filing a Notice of Directors if there is a change in directors. However, the key requirement is to file an annual return and financial statements with the Corporations Branch each year.

You may decide to register with Revenue Canada and apply for GST numbers. To help you with this decision, contact an accounting professional and CCRA.