The Federal Government has released draft legislation today to “enhance the reporting requirements for non-profit organizations to improve transparency in the sector”,  Initially, this will be for consultation purposes.   This was previously announced in the 2024 Fall Economic Statement.

Although Finance used the word “transparency,” it does not really add any transparency for the public, but only to a few CRA employees.   It is good that they will be improving the T1044 form to collect more information, but it really should be public so Canadians can know about this important sector.  We made a submission on this point a few weeks ago.

This proposal will mean that many non-profit organizations that had no filing requirement will now have a filing requirement.

The standard will be, beginning for the 2026 fiscal year, to file the T1044 for non-profit organizations if they meet any of the 4 criteria

• the total of all passive income in the fiscal period exceeds $10,000;
• the organization’s total assets at the end of the preceding fiscal period exceeded $200,000;
• an information return was required to be filed by the organization for a preceding fiscal period; or
• the total revenues in the fiscal period exceeds $50,000.

Non-profits with gross revenues of $50,000 and under, will need to file a more basic form.   This will definitely increase the number of organizations filing the T1044 and capture probably 40-60,000 non-profits that have revenue $50,000 and under who will now file a simplified form.

This will affect non-profits, but does not affect registered charities, which file a different form, the T3010.

Here is the text of the announcement:

Reporting by Non-profit Organizations

The Income Tax Act provides an exemption from income tax for organizations that meet the definition of a non-profit organization (NPO). Generally, an NPO is any club, society or association that is organized for social welfare, civic improvement, pleasure or recreation or any other purpose except profit. Charities are exempt from income tax under separate rules.

The 2024 Fall Economic Statement proposes several changes to the reporting requirements for NPOs in order to improve transparency in this sector.

Changes to the Annual Return

Currently, there is limited reporting required by NPOs that claim an income tax exemption. An NPO is required to file an annual information return if:

• the total of all passive income in the fiscal period exceeds $10,000;
• the organization’s total assets at the end of the preceding fiscal period exceeded $200,000; or,
• an information return was required to be filed by the organization for a preceding fiscal period.

The 2024 Fall Economic Statement proposes to amend the Income Tax Act to require NPOs with total gross revenues over $50,000 to also file the annual NPO information return.

New Filing Requirement for Small NPOs

The 2024 Fall Economic Statement also proposes to amend the Income Tax Act to require NPOs that do not meet the thresholds for filing the annual NPO information return to file a new, short-form return that contains basic information about the organization, including:

• its business number or trust number;
• the name of the organization and its mailing address;
• the names and addresses of the directors, officers, trustees or similar officials;
• a description of the organization’s activities, including whether it conducts activities outside Canada;
• the organization’s total assets and liabilities and annual revenues; and,
• other prescribed information.

Coming into Force

These measures would apply to the 2026 and subsequent taxation years.

In the general notice from the Department of Finance it notes:

The government invites all interested Canadians and stakeholders to provide feedback on these draft legislative proposals by emailing their comments to consultation-legislation@fin.gc.ca by September 12, 2025.

The draft proposals provide:

Legislative Proposals Relating to the Income Tax Act, the Income Tax Regulations, and the Global Minimum Tax Act, and Explanatory Notes

Reporting by Non-profit Organizations

1 (1) Subsection 149(12) of the Act is amended by striking out “or” at the end of paragraph (b), by adding “or” at the end of paragraph (c) and by adding the following after paragraph (c):

              (d) the total of all amounts each of which is an amount received in the period by the person, including as or on account of capital, exceeds $50,000.

(2) Section 149 of the Act is amended by adding the following after subsection (12):

Short-form information returns

(13) Unless subsection (12) applies, every person who, because of paragraph 149(1)(e) or (l), is exempt from tax under this Part on all or part of the person’s taxable income must, within six months after the end of each fiscal period of the person and without notice or demand therefor, file with the Minister an information return for the period in prescribed form and containing prescribed information, including

     (a) a description of the person’s activities, including whether it conducts activities outside Canada;

     (b) the total assets, total liabilities and total amounts received by the person for the period; and

     (c) the name and address of each director, officer or trustee of the person.

 

(3) Subsections (1) and (2) apply to fiscal periods that begin on or after January 1, 2026.

In case you are interested, Subsection 149(12) of the Income Tax Act (Canada) currently reads:

Information returns

(12) Every person who, because of paragraph 149(1)(e) or 149(1)(l), is exempt from tax under this Part on all or part of the person’s taxable income shall, within 6 months after the end of each fiscal period of the person and without notice or demand therefor, file with the Minister an information return for the period in prescribed form and containing prescribed information, if

   (a) the total of all amounts each of which is a taxable dividend or an amount received or receivable by the person as, on account of, in lieu of or in satisfaction of, interest, rentals or royalties in the period exceeds $10,000;

   (b) at the end of the person’s preceding fiscal period the total assets of the person (determined in accordance with generally accepted accounting principles) exceeded $200,000; or

   (c) an information return was required to be filed under this subsection by the person for a preceding fiscal period.

After these changes, if no further changes are required, Subsection 149(12) and 149(13) of the Income Tax Act (Canada) will be:

Information returns

(12) Every person who, because of paragraph 149(1)(e) or 149(1)(l), is exempt from tax under this Part on all or part of the person’s taxable income shall, within 6 months after the end of each fiscal period of the person and without notice or demand therefor, file with the Minister an information return for the period in prescribed form and containing prescribed information, if

   (a) the total of all amounts each of which is a taxable dividend or an amount received or receivable by the person as, on account of, in lieu of or in satisfaction of, interest, rentals or royalties in the period exceeds $10,000;

   (b) at the end of the person’s preceding fiscal period the total assets of the person (determined in accordance with generally accepted accounting principles) exceeded $200,000;

   (c) an information return was required to be filed under this subsection by the person for a preceding fiscal period; or

   (d) the total of all amounts each of which is an amount received in the period by the person, including as or on account of capital, exceeds $50,000.

 

(13) Unless subsection (12) applies, every person who, because of paragraph 149(1)(e) or (l), is exempt from tax under this Part on all or part of the person’s taxable income must, within six months after the end of each fiscal period of the person and without notice or demand therefor, file with the Minister an information return for the period in prescribed form and containing prescribed information, including

     (a) a description of the person’s activities, including whether it conducts activities outside Canada;

     (b) the total assets, total liabilities and total amounts received by the person for the period; and

     (c) the name and address of each director, officer or trustee of the person.