Revocation tax and the T2046 tax return
Revocation tax is a tax that you owe if you lose your charitable registration. The tax is equal to 100% of the value of all remaining assets, after you have paid all your debts.
You will owe revocation tax unless you meet all the following conditions:
you apply for and are granted re-registration within one year from the date of the notice of intention to revoke that was sent to you
you pay all other taxes, penalties, and interest that you are liable for under the Income Tax Act or the Excise Tax Act before the date of re-registration
you file all missing information returns (Form T3010s) and financial statements before the date of re-registration
You can reduce the amount of revocation tax you owe by using your remaining assets on your charitable activities. You can also transfer your assets to an eligible donee during the winding-up period. This keeps your assets in the charitable sector.
The winding-up period, also called the revocation period, starts the day after we issue the T2051A or the letter that serves as the notice of intention to revoke and ends one year later. During this period, you have to complete and file Form T2046, Tax Return Where Registration of a Charity is Revoked, and pay the revocation tax.
You must also send us:
complete information return(s) for the period(s) between the last Form T3010, Registered Charity Information Return filed, and the start of your winding-up period
a complete information return covering the same period as Form T2046
If you send us this information and pay the revocation tax before the due date, the winding-up period can be shorter.
Calculating the revocation tax
Following the revocation of your registration status, complete Form T2046, Tax Return Where Registration of a Charity is Revoked, to calculate your revocation tax. Consult Guide RC4424, Completing the Tax Return Where Registration of a Charity is Revoked to help you complete Form T2046.
There are two dates associated with calculating the revocation tax:
- the date of the notice of intention to revoke (T2051A or letter), which is referred to as Day 1
- the due date, which is one year from Day 1
The revocation tax is the total of the following:
- the fair market value of your property on Day 1
- any appropriations that took place starting 120 days before Day 1 and after
- the income received during the winding-up period
- any expenditures on your charitable activities during the winding-up period
- any debts your charity owes on Day 1
- any property transferred to an eligible donee during the winding-up period
If you owe revocation tax, send us a cheque or money order payable to the Receiver General for Canada when you file your Form T2046.
When is your Form T2046 due?
Your completed Form T2046 is due no later than one year after the date of your Form T2051A or the letter that serves as the notice of intention to revoke (Day 1).
What happens if you do not file your Form T2046?
If you do not file Form T2046, we will calculate the revocation tax based on the latest financial information we have on file and issue a notice of assessment.
A charity that has been revoked must keep its books and records. For more information, go to Books and records.
Where should you send your Form T2046?
By mail: Charities Directorate
Canada Revenue Agency
Ottawa ON K1A 0L5
By fax: 613-941-0186
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