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 (sometimes referred to as "objects") 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.
The purposes of an organization are the objectives that it is created to achieve. Each of an organization's purposes must be clearly stated in its governing document, such as letters patent, articles of incorporation, trust, or constitution. If an organization's purposes are not exclusively charitable, it is not eligible for registration.
An organization's governing document must contain a clear statement of each of its purposes. If the wording is broad or vague, a purpose is not likely to meet the legal requirements for registration as a charity. To be eligible for registration under the Income Tax Act, 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.
To help organizations that are applying for registration, as well as charities that want to change existing purposes, the CRA provides examples of charitable purposes. These examples can be found on our webpage Model purposes. While the list of model purposes provides examples that can be helpful to many organizations, it may not include purposes that meet all needs. As a result, it is often necessary to draft purposes specific to an organization. The CRA has developed Guidance, CG-019, How to Draft Purposes for Charitable Registration as a resource to support that process.
Using model purposes or drafting purposes in the manner set out in Guidance CG‑019 will not in itself guarantee that an organization is eligible for registration. However, doing so should facilitate the CRA's assessment of an organization's eligibility for registration under the Income Tax Act.
In addition to having charitable purposes and devoting its resources to charitable activities that further those purposes, there are other legal requirements that must be met for an organization to be registered under the Income Tax Act. For detailed information about registration requirements, see Guidance CG-017, General Requirements for Charitable Registration.
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