September 3, 2003 (Revised September 13, 2005)
Director / Trustee
Directors / trustees and like officials are persons who govern a registered charity. These persons hold positions that are usually identified in an organization's governing document (for example, president, treasurer and secretary).
Provincial law determines the circumstances under which a registered charity's directors / trustees can receive compensation. In general, a registered charity cannot pay its directors / trustees simply for occupying their positions. However, some provinces permit a charity to have governing documents allowing for reasonable compensation for services that directors / trustees provide to the charity (for example, the director is an employee).
Under the Income Tax Act, a registered charity that confers on a director / trustee an undue benefit is liable to a penalty equal to 105% of the amount of the benefit. This penalty increases to 110% and the suspension of tax-receipting privileges for a repeat infraction within 5 years.
- Summary policy CSP-U02, Undue benefits
- Guide T4033, Completing the Registered Charity Information Return
- Registered Charities Newsletter, Issue No. 21
- Guide T4063, Registering a Charity for Income Tax Purposes
- Income Tax Act, R.S.C. 1985 (5th supp.) c. 1, ss. 188.1(4), (5) and para. 188.2(1)(b)
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