There are a number of ways that a charity can lose its status as a registered charity. There are also a number of steps a charity must take once its status has been revoked.
A charity can request that their registration be revoked. A charity may choose to do this if they are no longer operating at all or they no longer want to be a registered charity. A charity might decide they do not want to be registered because it has become too difficult to meet the obligations of running a charity or they do not have the resources to pursue their purposes and activities. A charity cannot revoke its status to avoid any action being taken because they did meet their obligations.
You can ask to have your registration revoked by sending a letter to the Charities Directorate. The letter needs to be signed and dated by a director, trustee or someone who has signing authority. An organization’s governing documents may specify that two signatures are required. You will get a letter confirming that the process has begun.
The Directorate can start the process to revoke a charity’s registration if the charity fails to meet its obligations as a registered charity including when the charity...
A charity’s registration is officially revoked when a notice is published in the Canada Gazette that includes the reason for the revocation. The Directorate will also remove you from their online list of charities.
You will receive a Notice of Intention to Revoke a Charity’s Registration either in response to your request or from the Directorate if they are starting the process to revoke your registration because you failed to file your charity information return on time. If the Directorate is starting the revocation for another reason you will receive a registered letter explaining the reasons instead of the Notice.
If the revocation is not at your request you will have 90 days to file an objection or file your return if this is the reason for revocation. If you do not file an objection or your return, if you failed to file one, or you are unsuccessful in your objection your status will be revoked and you will be notified.
Once a charity’s registration is revoked they cannot issue donation receipts, they are not exempt from income tax and they are not a charity for GST purposes.
All of the charity's remaining assets must be used for charitable activities or transferred to another registered charity within one year of when the charity receives notice of the intention to revoke.
In the case of voluntary revocation a charity can choose to deal with their assets before applying. This way they will have the choice to transfer their assets to entities other than registered charities including municipalities or universities.
The charity that the assets are being transferred to must be in good standing with the Directorate and must have paid any taxes owing. More than half of the directors or trustees of the charity that will receive the assets must be at arm’s length with the directors or trustees of the charity that is transferring the assets.
The charity must file a Registered Charity Information Return for the time between when the last one was filed and when the charity received notice of the intention to revoke and another for the year between the notice and the filing of the Tax Return Where Registration of Charity is Revoked. The Canada Revenue Agency publication Completing the Tax Return Where Registration of a Charity is Revoked has information about completing this form.
The fair market value of any property (money, real estate etc.) the charity has on the day they received notice of the intention to revoke and any income they receive during the following year can be subject to a revocation tax. The tax is 100% of the value of the property and income. Charities do not need to pay the tax if all their assets are used for charitable activities during that year, used to pay debt or transferred to another registered charity.
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