Non-profit organization generally refers to an organization that uses its accumulated surplus or excess funds for its self-preservation, expansion, or plans to achieve its stated objectives rather than to distribute them as profit or dividends to its members
Generally, Non-profit organizations are exempted from income taxes but are not necessarily exempted from other taxes such as consumption (GST/PST), payroll, and properties taxes
In Canada or elsewhere, Non-profit organization are two kinds Charitable or Non-Charitable.
In Canada a Non-profit organization generally cannot register especially a Registred Charity for the consumption taxes GST/PST/HS and cannot claim input tax credits, However, a registered charity can apply for GST/PST/HST rebate usually 50% of the amount paid.
In Canada, a registered charity must be resident in Canada and there are four separate categories of charity:
Examples: operating a food bank, providing non-profit residential accommodation for persons of low income; providing clothing, and other basic amenities to persons of low income; providing the necessities of life to victims of disasters or sudden catastrophes.
Examples: establishing and operating schools; providing scholarships, bursaries, and prizes for scholastic achievement; childbirth education classes that focus on preparation for parenting and nutrition; increasing the public's appreciation of Aboriginal culture; and doing research in a recognized field of knowledge and making the results available to the public.
Examples: establishing and maintaining buildings for religious worship and other religious use; organizing and providing religious instruction; carrying out pastoral and missionary work.
Examples:
relieving a condition or disability associated with old age;
providing facilities for the care and rehabilitation of the elderly;
preventing and relieving sickness and disability;
providing certain public amenities to benefit the community;
providing counseling services for people in distress;
operating a shelter ;
operating a volunteer fire department.
To qualify for a charity status, an organization must fill out Form T2050 and show in its application that it devotes all of its resources (funds, personnel, and property) to charitable activities that directly further its charitable purposes. It should explain, in detail, the specific activities it will undertake to achieve each of the purposes stated in its governing document (letter of patent, constitution or bylaws, trust document, or other establishing documents).
Charities Registration (Security Information) Act, under Part 6 of The Anti-terrorism Act, re-defined the role and importance of protecting the integrity of Canada's registration system for charities in terms of Canada's anti-terrorism objectives to prevent terrorist financing through front organizations that have, or claim to have charitable goals.
The legislation has been specifically designed to protect the use of very sensitive information that may reveal an organization's ties to terrorist groups. This allows the Charities Directorate to make proper use of all information relevant to deciding whether an organization should be registered as a charity under the Income Tax Act.
If there are a reasonable grounds to believe, based on criminal and security intelligence reports, either that an organization makes its resources available, directly or indirectly to a terrorist group that is a listed entity under the Criminal Code, or to any other organization engaged in terrorist activities or in activities that support terrorist activities.
Charities Registration (Security Information) Act
A charity's stated objectives must be set out clearly in its governing documents such as a letter of patent or bylaws. Any stated objectives described which are not recognize by the common law as charitable may not be eligible for registration.
When stating the formal objective(s) or purpose(s), an organization must keep in mind a number of important factors:
The stated objectives must be precise and clear and it must relate to the organization's current goals that must be achievable. Avoid using stated objectives which are a wishful list of somewhere the organization has presently no resources or experience to achieve such objectives.
Model objects
What is a governing document?
A registered charity need not be incorporated, however, if a charity intent to borrow money or will acquire an immovable property (ensuring the continuity of the organization while the membership changes) or wish to limit any liabilities of its membership, it is advantages in most cases and would be mandatory to incorporate the organization
Incorporation documents
Other related articles :
How to start a Nonprofit Organization in Province of Quebec
Siddique Katiya
Sunday, January 6, 2013