Canada: CRA Publishes First Ever Report On The Charities Program 2015-2016 – Summary And Commentary

Last Updated: January 16 2017
Article by Natasha Smith

On December 30, 2016, the Canada Revenue Agency ("CRA") published its Report on the Charities Program 2015-2016 (the "Report").  Referred to by Bob Hamilton, Commissioner of the CRA, as a "means for CRA to improve its own transparency" on the regulation of charities, this is the first document of its kind released by CRA summarizing the programs and achievements of the Charities Directorate (the "Directorate") for 2015-16 and setting out the Directorate's future plans for regulating the charitable sector. Below is a summary of and commentary on the Report.

The Sector – Statistics and Registration

The Report provides readers with some interesting statistics about Canada's charitable sector:

  • There are 86,193 charities in Canada
  • Receipted donations total $15.7B (including $2.4B in non-cash gifts)
  • Over 40,000 charities operate using only volunteers
  • 5,395 charitable organizations engage in foreign activities
  • $3.2B was spent on foreign activities

The Report states that in 2015-16, of the 3,484 applications it received requesting charitable status, CRA granted registration to 1,670 new charities. The Report states that the primary reason for declining an application is the applicant's failure to provide CRA with sufficient information to determine whether the proposed activities are charitable at law. This is consistent with our experience in which CRA almost always requests additional information after first processing a charitable application.

As the Directorate's mandate is to ensure that the activities engaged in by registered charities are in fact charitable and because registered charities are provided with significant benefits (e.g., exemption from tax and the ability to issue donation receipts), organizations applying for charitable status should not be surprised when their applications are not immediately approved. CRA reviews applications for registration in considerable detail. Before applying for charitable status, a charity should have a firm idea of its activities and be prepared to provide CRA detailed descriptions of its programs. It is our recent experience that CRA now expects more detail in charitable applications than it has in the past.


Education First Approach

The Report confirms that, where appropriate, CRA will use an education-first approach when a charity under audit is found to be non-compliant. That means that CRA will look to educate charities on the rules before imposing a penalty or sanction. The Report confirms that 1% of registered charities are audited every year and that the most common reasons for audit include:

  • random selection;
  • complaints from the public;
  • media articles and other public sources;
  • information included in T3010 annual returns; and
  • past non-compliance.

Depending on the size and complexity of the charity, CRA will either conduct (i) an office audit, whereby CRA examines the charity's file, publicly available records, and some books and records at CRA offices; or (ii) a field audit, whereby CRA examines all books and records at the charity's place of business.

Upon the conclusion of an audit, the Report confirms that CRA will issue an education letter for minor concerns, a compliance agreement for moderate concerns and, where it has serious concerns, CRA may impose an intermediate sanction or propose revocation of registration or annulment of registration. Unfortunately, the Report does not provide any insight into what CRA considers to be "minor", "moderate", or "serious" concerns.

The degree of non-compliance (e.g., the value of improperly issued receipts, or the extent of the inaccuracy in T3010 filings) will often determine the severity of CRA's action. Historically, we have seen CRA issue education letters for non-compliance issues such as technical errors in T3010 filings, minor errors in the information listed on official donation receipts, and failing to provide CRA with updated governance documents. CRA has sought to have charities enter into compliance agreements for non-compliance issues such as providing funds to non-qualified donees, backdating donation receipts, and issuing donation receipts for gifts in-kind without proper appraisal of the gift. We have seen sanctions and penalties imposed for issues such as improper receipting (i.e., issuing receipts for services or secular tuition fees), failure to maintain adequate books and records, and failure to maintain direction and control over resources.  Again, CRA maintains full discretion as to the intermediate sanction or final penalty proposed.

In some cases, a charity's obligations under a compliance agreement may be negotiated, but it is important to note that, on a subsequent audit, CRA will consider whether an executed compliance agreement has been breached.

Objections and Appeals

The Report confirms the objection and appeals process for cases in which a penalty or sanction is formally imposed. Specifically, the charity has 90 days within which to file an objection with CRA's Appeals Branch and, should the charity disagree with the decision of the Appeals Branch, it can appeal to the Federal Court of Appeal or the Tax Court of Canada within 30 days of the decision of the Appeals Branch. A charity must appeal to the Federal Court of Appeal where the Directorate has issued a Notice of refusal to register, Notice of intention to revoke, Notice of designation or Notice of annulment and to the Tax Court of Canada where the Directorate has issued either a Notice of assessment or Notice of suspension of receipting privileges.

During the period June 12, 2005 to March 31, 2016, the Report confirms that only 10 Notices of intention to revoke for cause were vacated on objection, while 100 were confirmed.  Interestingly, however, where CRA imposed a revocation tax, 19 decisions were confirmed while 58 were vacated on objection.

Audit Results

The Report confirms the results of the 726 audits completed in 2015-16, as follows:

  • 4 – Sanctions imposed
  • 21 – Notices of intention to revoke registration issued
  • 22 – Voluntary revocations
  • 25 – Other actions taken (i.e., imposition of revocation tax)
  • 40 – No action taken
  • 59 – Registrations annulled
  • 111 – Compliance agreements signed
  • 444 – Education letters sent

The Report further confirms that the most commonly identified areas of non-compliance following audits were:

  • incorrectly issued donation receipts;
  • errors on T3010 Annual Returns;
  • failure to keep proper books and records;
  • engaging in activities that are non-charitable and/or operating for non-charitable purposes; and
  • failure to file T4/T4A slips.

Additionally, the Report reveals that only 1.4% of the 1,429 charities that had their status revoked in 2015-16 incurred this sanction as a result of an audit.  The most common reason that CRA revoked a charity's status in 2015-16 was for failure to file its T3010 Annual Return.  Notably, as previously reported, in the recent case of Opportunities for the Disabled Foundation v. Canada (National Revenue), the Federal Court of Appeal confirmed CRA's position that a T3010 containing "serious" errors is considered to be a T3010 that has not been filed "as and when required" under the Income Tax Act.  Accordingly, it appears that a charity's charitable status may now be revoked on the basis of failure to file its T3010 where it has filed a T3010 containing serious errors.

Discussed below are measures the Directorate will be taking to try to curb instances of late filing/failure to file.

Going Forward


The Report confirms that, upon reviewing the effectiveness of its sector outreach program, the Directorate will be taking action in the following areas:

  • Improving the Charities and giving webpages and online products;
  • Use of social media and other electronic communications; and
  • Working with the sector to increase the reach of its message.

The Report confirms that the Directorate has recently completed a post-implementation review of its arts and health guidance products which were issued in 2012 and 2013, respectively. Whether any changes will be made to these documents was not disclosed. As we do with all CRA Guidances, we will keep an eye on any new developments.

Political Activities


As previously reported, Minister Diane Lebouthillier announced in January 2016 that CRA would be winding down its political activities audit program. At that time, 30 audits had been completed, which resulted in five revocation decisions. The Report confirms that as of September 30, 2016, 42 audits have been completed. These additional 12 charities have been advised of CRA's findings and have been given time to respond. Accordingly, the Report does not reveal the initial outcome of the additional audits. Twelve audits are still underway.


CRA has concluded its online and in-person consultations on the political activities rules. Now, a consultation panel, including Miller Thomson's Susan Manwaring, will be tasked with using feedback from the consultations to make recommendations to CRA in, what the Report states to be, early 2017.


The Report confirms that the Directorate is currently working on a number of new guidance products, including updates to the following:

We will report on the updates to these products.

Compliance Initiatives

Late filing

Charities are required to file their T3010 annual returns within six months of their fiscal year end.  The Report confirms that late filing of annual returns is an "area of specific concern" for the Office of the Auditor General, as an internal review revealed that 1 in 4 charities do not file their annual returns on time. In an effort to encourage charities to file on time, the Report states that, beginning fall 2017, the Directorate will implement the following measures:

  • filing reminders will be emailed to charities before their fiscal year end (and will continue to be emailed to charities four months after their year end, as is the current practice); and
  • automated phone calls will be made to charities one month before their filing deadline (rather than two to three months after, as is the current practice).

Importantly, in order to receive email reminders, charities will need to provide their email addresses to CRA. We have found that CRA is now requiring charities seeking registration to provide a relevant email address at the application stage. For those charities already registered, an email address to which CRA will send these reminders (as well as other notifications) may be provided to CRA by contacting the Client Services Division of the Charities Directorate.

Ineligible Individuals

Pursuant to the Income Tax Act, CRA has the right to revoke the charitable registration of or refuse to register an organization that has one or more ineligible individuals on its board in senior management positions or in a position of control. The Report confirms that the Directorate intends to conduct an "in-depth review of the ineligible individuals issue", in order to:

  • determine the extent and impact of ineligible individuals;
  • provide outreach and education to charities about ineligible individuals; and
  • detect and address serious non-compliance of registered charities with ineligible individuals.

We query whether this last motive will result in an increase in the audit of charities.

Our summary of CRA's guidance on ineligible individuals can be found here.

The Charities Modernization Project (CHAMP)

As previously reported, the 2014 Federal Budget proposed to provide the Directorate with $23M over five years to enable it to modernize its information technology. The Report confirms the following IT projects are scheduled to be completed by the end of 2018:

  • launch of online application for charitable registration;
  • e-filing capabilities for T3010 Annual Returns; and
  • improved Charities Listings page.


The Report is a step in the right direction toward improving the transparency of the Directorate's regulation of charities. Providing insights to the public on topics of priority to the Directorate and confirming the Directorate's mandate to ensure compliance through proactive education is welcomed by charities and their administrators and legal/accounting services providers.

We will continue to update you as the Directorate progresses with the initiatives noted in the Report.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Natasha Smith
In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions