Canada’s registered charities are dedicated to doing good across their communities, creating positive change and achieving their mission, often using creative, budget-conscious means. But when it comes to meeting Canada Revenue Agency compliance requirements—which includes a yearly obligation to complete the Form T3010 (Registered Charity Information Return)—they often run into unwanted complexity.

According to a survey conducted earlier this year by Carleton University’s Charity Insights Canada Project, 25 per cent of charities report challenges understanding CRA guidelines, 24 per cent face difficulties gathering the data required to meet their reporting obligations and 23 per cent say they lack the time, personnel and budget to satisfy federal compliance requirements. Fully 16 per cent say they regularly navigate differences in operational definitions between their organizations and CRA, while 14 per cent can’t stay ahead of changes to CRA’s reporting requirements.

That latter challenge reared its head again this year when the CRA introduced an updated T3010 form with new reporting rules. Simply understanding which version of the T3010 form to file is imperative: Version 23 for charities with fiscal periods ending on or before December 30^th, 2023; and Version 24 for charities that have fiscal periods that end on or after December 31^st, 2023. The correct version of the form must be filed in full and on time. Failure to do so could result in the revocation of a charity’s registered status.

Here are some of the other key changes to T3010 reporting rules for 2024:

Donor advised fund reporting—Charities that control one or more donor advised funds (DAFs) must report on the total number and value of DAF accounts held at the end of the fiscal period, along with the value of donations to—and the value of qualifying disbursements from—those DAF accounts during the fiscal period.

Disbursement quota reporting—The CRA defines a charity’s disbursement quota as “… the minimum amount a registered charity is required to spend each year on its own charitable activities and qualifying disbursements through gifts to qualified donees or grants to non-qualified donees. The disbursement quota calculation is based on the value of a charity’s property not used for charitable activities or administration.”

A charity must now complete a Schedule 8 form providing information on its disbursement quota if, during the 24 months prior to its current fiscal period, the average value of the charity’s property not used on charitable activities or administration exceeded $100,000, or $25,000 (if the charity is a public or private foundation).

Restricted funds—A foundation must now disclose the value of the restricted funds it holds, along with the total value of restricted funds that the foundation was not permitted to spend during a fiscal period.

10-year gifts—The T3010 no longer requires charities to disclose the value of 10-year gifts of assets such as cash, investments or property.

To meet their reporting requirements, charities that take a proactive approach to everything from data collection to organization have an edge over organizations that are more reactive in meeting their obligations. Effective reporting also means dedicating adequate resources of time, budget and skilled expertise to stay a step ahead of CRA compliance.

Simply ensuring that a charity’s operational definitions and policies are in sync with the CRA’s and working to minimize staff turnover can help ensure continuity and minimize the risk of non-compliance penalties. So, too, can engaging a Chartered Professional Accounting firm with experience and expertise in the charities and non-profit sector.

Leaving reporting to chance and hoping to achieve full compliance isn’t an option—especially for charities that aim to gradually grow their operations and expand their mission-driven impact. These charities will eventually face more complex reporting requirements and greater T3010 scrutiny. Ensuring they have effective systems and processes in place is a key step in mitigating avoidable compliance-related risk.

Thomas Turnbull, Partner

Charities and Non-Profits practice

To discuss your accounting and assurance needs, contact us today.