Canadian Non-Profit Incorporation FAQ
Starting a new non-profit organization doesn’t have to be complicated.
The FAQ below can answer the most common questions about non-profit incorporation in Canada.
What is a Non-Profit Corporation?
A non-profit corporation is a legal entity separate from its members and directors formed for purposes other than generating a profit to be distributed to its members, directors or officers. While a non-profit corporation can earn a profit, the profit must be used to further the goals of the corporation rather than to pay dividends to its membership. Non-profit corporations are formed pursuant to federal or provincial law. A non-profit corporation can be a church or church association, school, charity, medical provider, activity clubs, volunteer services organization, professional association, research institute, museum, or in some cases a sports association. Non-profit corporations must apply for charitable status to benefit from tax-exempt status and to issue tax-deductible receipts to donors.
Non-profit corporations are distinct from business corporations which are formed to make a profit and to distribute the profit to its shareholders. Business corporations are regulated by either federal or provincial laws. For more information on business incorporations, click here.
Why Incorporate a Non-Profit Corporation?
Incorporating gives an organization legal status. It is not essential for a non-profit corporation to incorporate. Whether an organization decides to incorporate or not depends upon its activities, nature, or type of organization.
As a legal entity, an incorporated association is recognized by the legal system as having rights and responsibilities. An incorporated organization can enter into contracts, buy land, borrow money, have bank accounts, etc., in its own name. Other advantages to incorporating may include:
- The liability of the members is limited (for example, members are not personally liable for debts of the corporation);
- Continuity of the organization is assured while the membership changes;
- A corporation can own property in its name regardless of membership change;
- The ability to bring a legal action in its own name (an unincorporated body cannot); and
- The chances of receiving government grants may increase because of the stability the organization appears to have.
An unincorporated association is an agreement between individuals, and generally has no legal status. The members may be personally liable to the creditors for the full amount of any debts. An unincorporated body cannot generally sue or be sued; members must sue or be sued personally. Title to property has to be in all the members’ names if the group is not incorporated. This can make selling the property difficult.
What are the Steps to Form a Non-Profit Corporation?
Following the selection and reservation of a corporate name, the next step is to file non-profit articles of incorporation (sometimes memorandum) with the proper government department. If you intend on applying for charitable status, it is important that the articles contain the required clauses to make sure your articles will qualify for charitable status (see below).
The corporation must comply with corporate formalities and hold annual meetings of directors and members. Bylaws must be adopted for the corporation. Documents that help you comply with these corporate formalities are contained in our packages.
What Are the Fees to Incorporate a Non-Profit Corporation?
One of the most important factors for any non-profit corporation when deciding to incorporate is the cost of incorporation. The jurisdiction of incorporation will automatically become criteria for decision because government fees are not the same.
Below are the current government incorporation fees for non-profit corporations in Canadian jurisdictions:
Moreover, if you are incorporating a federal corporation, you must also register extra-provincially. Currently, the extra-provincial registration fees for a federal corporation which has its registered office in that province are (these are in addition to the federal incorporation fee of $250 indicated above):
|Extra-Provincial Registration Fee
|Prince Edward Island
What Are the Delays when Incorporating a Non-Profit incorporation?
This depends on the jurisdiction of incorporation. Below are the current government incorporation approximate delays for non-profit corporations in Canadian jurisdictions:
(additional fees apply)
How do I Apply to Obtain Charitable Status for my Non-Profit Corporation?
The Canada Revenue Agency (CRA) (formerly Revenue Canada) is the government department responsible for granting organizations charitable tax status. The process routinely takes 6 months to 18 months and requires applicants to fulfill a number of requirements. One of the major advantages of obtaining charitable status is that the organization is able to issue receipts to donors for income tax purposes. This can be a major advantage when soliciting for donations. In addition, charities receive certain tax exemptions. If an organization is created in Canada, is non-profit and is charitable in purpose, it may qualify as a charity within the meaning of the Income Tax Act. A non-profit corporation cannot issue tax deductible receipt simply because it is a non-profit corporation. It must first submit an application and be accepted as having charitable status.
If you intend to apply to CCRA for charitable registration, we strongly suggest that you first contact CCRA first to confirm the use of the objects of your corporation. However, your organization’s use of proper objects is only part of Revenue Canada’s requirements for charitable registration. Revenue Canada must take other factors into consideration, including the activities and programs your organization undertakes to achieve its objects. For information on how to apply to Revenue Canada for charitable registration, you may wish to contact your local Revenue Canada office which can be found in the blue pages of your telephone book or call the Charities Division in Ottawa at (613) 954-0410, Toll – Free 1-800-267-2384.
Below are relevant links to the CCRA website:
Canada Customs and Revenue Agency (formerly Revenue Canada)
- Information For Charities
Application to register a charity under the Income Tax Act
- Charities Division Contact Information
Not sure where to begin?
Helping Canadian Businesses
Each year Corporation Centre helps thousands of Canadian owners and managers to formally register, manage, and grow their businesses from the convenience of their office.