Canada

Don’t let T3010 tax filing derail your organization’s charitable work

ARTICLE  | 

Executives in registered charities want to focus their time on creating great programs and furthering the causes that they support. A core component of mission attainment is compliance with regulatory matters to ensure the organization can exist. An important and relevant compliance matter that is often overlooked is the preparation of the T3010 for registered charities.

Our colleague Robert. B. Hayhoe at the law firm Miller Thomson points out in a newsletter, that the courts have recently taken firm positions about the filing of form T3010. These recent cases suggest that failure to properly file a T3010 each year can cause revocation of registered status. For example, the Opportunities for the Disabled Foundation had its charitable status revoked in 2015 following repeated failures to file what the Canada Revenue Agency (CRA) considered to be a complete and accurate T3010 form.

By way of background, the T3010 form is an annual CRA filing for registered charities. The deadline is six months after the organization’s fiscal year-end. The information in the T3010 helps the CRA determine if an organization meets the requirements for continuing to be a registered charity. In addition, the T3010 is made publicly available on the CRA website. These public filings are reviewed by external rating agencies and other existing and potential stakeholders, thus having significant implications on funding opportunities.

Here are some tips to consider when completing your T3010

  1.  Understand the requirement to file a T3010
    Some organizations are simply unaware of the need to file this form. Some leaders think that since the organization is not taxable, it does not need to complete tax forms. Organizations need to make sure that their accounting and bookkeeping are handled by individuals who are informed about the special requirements of charitable organizations – including the requirement for a T3010 filing each year.

  2. Ensure information reported on the T3010 is consistent with the organization’s books and records
    Sometimes, we find that T3010 data is not congruent with other information prepared by the organization – particularly, the financial records. We recommend that organizations ensure that their financial systems are set up to meet the requirements of T3010 filing. This may require some support from a professional advisor familiar with standard accounting packages as well as the CRA’s requirements. This could include reconfiguring the financial system as well as helping educate staff and volunteers – particularly those involved in accounting – so that compiling the T3010 is as simple as possible.

  3. Understand where there is grey area
    Not all items are black and white, therefore, several specific items may require some judgement in completing. It is important to understand what these are to ensure that the completed form has the correct information.

    These grey areas may include the following points:
  • Political activities
  • Defining fundraising, administration and programs, and
  • International activities

In dealing with these three ‘grey areas’, the organization’s leaders need to take a step outside of the financial statements. Rather, information on these items may need to be gathered from the people in the organization who are more knowledgeable of those areas and more familiar with these activities. As such, the leadership needs to communicate to the managers and staff of each area of the organization what the CRA’s informational requirements are and the importance of accurate reporting.

Leadership action plan

Ensuring compliance with the CRA requirements will allow the organization to work towards mission attainment. Our suggested action plan is:

  • Make sure you are fully aware of the information that the CRA calls for in the T3010 form to ensure that the organization’s information systems are set up to easily capture the information required to complete the form. The CRA website has a detailed guide on how to complete each line of the form. 
  • Do not leave the form to the last minute as this has the potential to increase the risk of errors and omissions in completing the T3010.
  • Make sure that your external service provider is aware of all pertinent activities of the group, including political activities and international work. The leadership needs to exercise diligence in reviewing the prepared documents to ensure they are accurate and complete. This cannot be the sole responsibility of the service provider as they may not have a full understanding of the day-to-day activities.

Working closely with your service provider will help you achieve your mission efficiently.

To review Miller Thomson’s article “Courts raise the stakes on tax filings” click here.  

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