In 2003, a National Survey was undertaken of Nonprofit and Voluntary Organizations, indicating that there are over 80,000 NPOs in Canada. These consist of various types of clubs, trade and professional associations, etc. Concerned about non-compliance in the NPO sector, CRA initiated a 3 year project in 2009 to review compliance, identify data gaps requiring filings and to determine where more robust legislation may be needed. CRA focused particularly on areas where NPOs may engage in commercial activities to generate income to sustain operations. Technical interpretations of the Income Tax Act issued by CRA over the past two years have substantially restricted the scope of such activities, creating uncertainty for NPOs. CRA focused on clubs and associations in particular for this project.
In response to the audits, CSCM undertook a project in collaboration with Grant Thornton and Miller Thomson through Peter Fullerton and Susan Manwaring that reviewed the outcome of the audits and produced a report with a set of recommendations for clubs to consider to avoid being “offside” of the Income Tax Act and putting their not-for-profit status at risk – please click here for more information on that initiative and the recommendations that came out of it.
It is generally agreed that change may coming but we don’t yet know what that will be and when, and continue to encourage clubs not to jump too quickly to make drastic changes. However we do strongly encourage you to review the information in the reports and on the Q&A site, and to review the six recommendations arising from the CSCM’s initiative in 2012. (see above link)
Please be assured that CSCM will continue to monitor the issue and information from the government through a number of channels. At the invitation of the Muttart Foundation in Alberta, CSCM participated in a special consultation meeting with other NPO’s, accounting and legal firms, CRA and the Department of Finance in May 2012. The Foundation is tracking the issue as are Grant Thornton, Miller Thompson and our own legal firm Borden Ladner Gervais and will continue to feed us information as it becomes available.