On August 15, 2025, the Federal Department of Finance released draft legislation enhancing the reporting requirements for non-profit organizations (“NPOs”).
First announced in the 2024 Fall Economic Statement, these measures aim to increase transparency across the sector and will, if passed, require virtually all NPOs to file an information return annually with the Canada Revenue Agency (“CRA”).
Why the draft legislation matters for NPOs
Under paragraph 149(1)(l) of Canada’s Income Tax Act (the “Act”), organizations that qualify as NPOs are exempt from income tax. Unlike registered charities, NPOs cannot issue tax receipts for donations, but they still benefit from this exemption so long as they are organized and operated exclusively for purposes other than profit. The draft legislation targets this group by introducing new reporting obligations designed to increase transparency across the sector.
What’s changing for NPO information returns
The draft legislation proposes amendments to the Act that would require:
- NPOs with total gross revenues over $50,000 to also file the annual T1044; and
- NPOs that do not meet the thresholds for filing the T1044 to file a new, short-form return that contains basic information about the organization, including:
a. its business number or trust number;
b. the name of the organization and its mailing address;
c. the names and addresses of the directors, officers, trustees or similar officials;
d. a description of the organization’s activities, including whether it conducts activities outside Canada;
e. the organization’s total assets and liabilities and annual revenues; and
f. other prescribed information.
Should it pass, the draft legislation would result in a greater number of NPOs being required to file a T1044 with the CRA detailing their activities and finances—where many NPOs did not have to do so previously. It would also require effectively all organizations claiming a tax exemption under paragraph 149(1)(l) of the Act to file some sort of information return, annually, with the CRA.
For questions or concerns, please reach out to Chris Bodnar.