Bringing charities back into compliance

The Charities Directorate monitors Canadian registered charities to ensure they comply with the requirements of the Income Tax Act and the common law rules relating to charities.

When we discover non-compliance issues including late-filed returns, inaccurate or incomplete returns, official donation receipts that are not issued in accordance with the Act, or disbursement quota shortfalls, we use a series of progressive compliance measures. In less serious cases we use education letters or compliance agreements. In more serious cases we impose monetary penalties, suspend tax-receipting privileges, or, as a last resort, revoke registered status.

Experience shows us that most non-compliance by registered charities is unintentional, accidental, and often of low material consequence. In these cases, we use education letters and compliance agreements to help get the charity back on track. Through this approach, charities are given the opportunity to bring themselves back into compliance without imposing penalties or sanctions. However, there are some non-compliance issues, such as involvement in tax shelters or issuing false receipts, that are too serious to enable a charity to maintain its registered status.

We encourage charities to contact us to correct any errors they might have made in the past. Our objective is to work with charities to resolve difficulties and help them get back on track. For more information, go to Guidelines for applying sanctions.

Approaching the Directorate

To begin discussions with the Directorate, registered charities should generally contact us in writing and provide the following information:

• the name, address, telephone number, business number, GST/HST registration number, or any other identification tax number assigned by the Canada Revenue Agency to the taxpayer

• the address of the charity’s authorized representative (if applicable), including telephone and fax numbers

• the fiscal period(s) being referenced

• a complete and accurate description of the non-compliance including:

  • the duration and extent of the charity's involvement

  • the amount of resources involved - this includes financial, physical, and human resources

  • an explanation of how the non-compliance arose

The written material must be as complete as possible so that we can evaluate the non-compliance, and determine how to proceed. Once the material has been received and reviewed, an officer within the Directorate will contact the charity and may request additional information or documentation.

We understand that some charities may be apprehensive to provide us with information on their non-compliance. If so, a charity can contact us in writing on a no-name basis. Charities can also contact us by telephone or TTY service for persons with a hearing or speech impairment.

Correcting non-compliance

When registered charities provide information about non-compliance to the Directorate, they may be required to:

• correct the effects of past non-compliance, depending on the nature and severity of the non-compliance, within a reasonable period of time

• enter into a compliance agreement, which identifies the non-compliance and outlines, in detail, the steps that the charity must take to bring itself into compliance (the compliance agreement and timeframe are established following discussion and negotiation between the charity and the Directorate)

• present a plan to demonstrate how actions have been taken, or that measures will be put in place, to prevent future non-compliance

Contact information

To provide information about non-compliance to the Directorate, contact us:

By mail:
Director
Compliance Division
Charities Directorate
Canada Revenue Agency
320 Queen Street
Ottawa ON  K1A 0L5

By telephone:
1-800-267-2384

By TTY service for persons with a hearing or speech impairment:
1-800-665-0354