Understanding undue benefit

Charities in Canada are not allowed to bestow undue benefit, a situation where an individual, corporation, or other entity receives a tangible benefit from their involvement with a particular charity. This is a very important issue for charities to understand since the penalty for giving an undue benefit is 105% of the benefit for a first offence and 110% of the benefit for a second offence. Although there are many examples of how charities can get into trouble with undue benefit, a common difficulty that charities should watch for is member and non-member pricing.

Understanding undue benefit

New CRA forms for charities

As of May 2009, the Canada Revenue Agency (CRA) replaced the Registered Charity Information Return with a new form, the T3010B. The new form contains far more detailed content, and because of the nature of the questions it is essential that the form is filled out properly. This podcast also discusses the new application for registered charity status which will be in effect as of September 2009.

New CRA forms for charities

The CRA's model objects

The Canada Revenue Agency (CRA) recently published a list of model objects (charitable purposes) that nonprofit organizations can consult before applying for charitable status. Adam Aptowitzer, a lawyer with the Ottawa-based law firm Drache LLP, explains what these model objects are, and how they may help organizations get through the registrations process more quickly and with less difficulties along the way.

As the CRA website states, "If an organization uses a model object, the CRA will usually not need to discuss the wording of the object with you. This may speed up the decision making processes."

The CRA's model objects (MP3)

Sports as a charitable object?

The Supreme Court of Canada ruled last year that sports organizations below the national level do not qualify as registered charities. The ruling is the result of a case involving the Amateur Youth Soccer Association (AYSA), which operates at the provincial level. Adam Aptowitzer, a lawyer with the Ottawa-based law firm Drache LLP, discusses the promotion of soccer and fitness as a charitable object, and the likelihood of obtaining charitable status for sports organizations.

Sports as a charitable object? (MP3)

Applying for charitable status

Applying for charitable status through the Canada Revenue Agency can be a long and sometimes arduous process. But it will go a lot more smoothly if you are properly prepared. Adam Aptowitzer, a lawyer with the Ottawa-based law firm Drache LLP, explains what organizations must do before they apply, how to avoid common mistakes on your application, and what happens if your request is rejected.

Applying for charitable status (MP3)