There are a number of persons besides Canadian registered
charities and non-profit organizations that have special tax-exempt
status under the federal Income Tax Act (Canada) (the
"Act"). These persons are listed in a section of
the Act called "miscellaneous exemptions." It is
interesting to note that the list includes natural persons (such as
certain officers or servants of governments of a country other than
Canada and members of their families), corporations, and several
other special entities, such as different types of trusts.
Even though no federal income tax is payable by these persons, they
must complete and file certain documents with the Canada Revenue
Agency ("CRA") on an annual basis.
This article focuses on the basic filing requirements of the
corporations that are listed in this section of the Act.
These corporations may include the following:
Corporations owned by the Crown (wholly-owned or in some cases
90% owned by the Crown);
Certain agricultural organizations, boards of trade, and
chambers of commerce;
Certain labour organizations;
Insurers of farmers and fishermen;
Mutual insurance corporations;
Non-profit corporations for scientific research and
Prescribed small business investment corporations; and
Registered Canadian amateur athletic associations.
According to CRA, all tax-exempt corporations must complete and
file a T2 Corporation Income Tax Return every year and attach
certain schedules to their T2 Return. CRA provides that the
only tax-exempt corporations that do not have to comply with this
requirement are Crown corporations, Hutterite colonies, and
Canadian registered charities. The minimum schedules that are
required to be submitted to CRA with the T2 Return are as
GIFI Schedule 100 (this schedule is called the "Balance
Sheet Information"; it shows the corporation's financial
position at the end of the particular taxation year); and
GIFI Schedule 141 (this schedule is a "Notes
Checklist" that identifies the person who prepared the
financial statements for the corporation and contains other similar
Notably, these tax-exempt corporations do not need to file
separate financial statements in addition to the above listed
schedules. If a corporation is an active corporation, and it
has completed any transactions during the year, it must also attach
the following schedule:
GIFI Schedule 125 (this schedule is called the "Income
Statement Information"; it shows any income generated and
expenses incurred by the corporation during the particular taxation
CRA has indicated that corporations that are inactive often
still file the GIFI Schedule 125 and do not list any amounts; thus,
it is possible that CRA may ask an inactive corporation to complete
and file this schedule.
In addition to the above, there is a list of questions on page 2
of the T2 Return (a copy of which can be found here http://www.cra-arc.gc.ca/E/pbg/tf/t2/t2-15e.pdf)
and if the corporation answers "yes" to any of the
questions on this page, the corporation must file the corresponding
A corporation that is tax-exempt under the Act and that
meets all of the criteria below can complete a Short T2 Return (a
3-page return), rather than the normal 8-page T2 Return. The
corporation will still need to file the Balance Sheet Information
schedule, the Notes Checklist, and any other applicable Schedules
including possibly the Income Statement Information. In order
to qualify to file a Short T2 Return, a corporation must:
have a permanent establishment in only one province or
not be claiming any refundable tax credits (other than a refund
of instalments paid);
not receive or pay out any taxable dividends;
report in Canadian currency;
not have an Ontario transitional tax debit; and
not have an amount calculated under section 34.2 of the
Some organizations described in paragraph 149(1)(e) of the Act
(agricultural organizations, boards of trade, or chambers of
commerce) may be required to file a T1044 Non-Profit Organization
Information Return. An organization has to file a T1044 if
any of the following apply:
it received or is entitled to receive taxable dividends,
interest, rentals or royalties totalling more than $10,000 in the
it owned assets valued at more than $200,000 at the end of the
immediately preceding fiscal period; or
it had to file an NPO information return for a previous fiscal
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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