Non-Profit Organization in Canada

I am going to work within a non-profit organization in BC Canada. So I want to know more about it.

What is a Non-Profit Corporation?

A non-profit corporation is a legal entity separate from its members and directors formed for purposes other than generating a profit to be distributed to its members, directors or officers. While a non-profit corporation can earn a profit, the profit must be used to further the goals of the corporation rather than to pay dividends to its membership. Non-profit corporations are formed pursuant to federal or provincial law. A non-profit corporation can be a church or church association, school, charity, medical provider, activity clubs, volunteer services organization, professional association, research institute, museum, or in some cases a sports association. Non-profit corporations must apply for charitable status to benefit from tax-exempt status and to issue tax-deductible receipts to donors.

Non-profit corporations are distinct from business corporations that are formed to make a profit and to distribute the profit to their shareholders. Business corporations are regulated by either federal or provincial laws.

Why Incorporate a Non-Profit corporation?

Incorporating gives an organization legal status. It is not essential for a non-profit corporation to incorporate. Whether an organization decides to incorporate or not depends upon its activities, nature, or type of organization.

As a legal entity, an incorporated association is recognized by the legal system as having rights and responsibilities. An incorporated organization can enter into contracts, buy land, borrow money, have bank accounts, etc., in its own name. Other advantages to incorporating may include:

  • The liability of the members is limited (for example, members are not personally liable for debts of the corporation);
  • Continuity of the organization is assured while the membership changes;
  • A corporation can own property in its name regardless of membership change;
  • The ability to bring a legal action in its own name (an unincorporated body cannot); and
  • The chances of receiving government grants may increase because of the stability the organization appears to have.

An unincorporated association is an agreement between individuals and generally has no legal status. The members may be personally liable to the creditors for the full amount of any debts. An unincorporated body cannot generally sue or be sued; members must sue or be sued personally. The title to the property has to be in all the members’ names if the group is not incorporated. This can make selling the property difficult.

Where to Incorporate?

An organization may incorporate federally or provincially. This decision may be based on the location of the organization. If the organization is to carry on its activities in more than one province under the same corporate name and wishes to move its registered office around the country with ease, it may incorporate federally. A local organization that will remain in the community or province usually incorporates provincially. An organization that is incorporated federally may also be required to register provincially, depending on the nature of its activities in each province.

What are the steps to form a Non-Profit Corporation?

Following the selection and reservation of a corporate name, the next step is to file non-profit articles of incorporation (sometimes memorandum) with the proper government department. If you intend on applying for charitable status, it is important that the articles contain the required clauses to make sure your articles will qualify for charitable status (see below).

The corporation must comply with corporate formalities and hold annual meetings of directors and members. Bylaws must be adopted for the corporation. Documents that help you comply with these corporate formalities are contained in our packages.

What are the fees to incorporate a Non-Profit Corporation?

One of the most important factors for any non-profit corporation when deciding to incorporate is the cost of incorporation. The jurisdiction of incorporation will automatically become the criteria for decision because government fees are not the same.

Below are the current government incorporation fees for non-profit corporations in Canadian jurisdictions:

Jurisdiction Government Fee
Federal $250
Alberta $75
British Columbia $100
Manitoba $100
Newfoundland $70
New Brunswick $62
Nova Scotia $40
Ontario $155
Quebec $158
Saskatchewan $65
Yukon Territory $245

Moreover, if you are incorporating a federal corporation, you must also register extra-provincially. Currently, the extra-provincial registration fees for a federal corporation which has its registered office in that province are (these are in addition to the federal incorporation fee of $250 indicated above):

Province Extra-provincial
Registration Fee
Alberta $220
British Columbia $100
Manitoba $100
Newfoundland $260
New Brunswick $100
Nova Scotia $252
Northwest Territories $100
Ontario $100
Prince Edward Island $250
Quebec $34
Saskatchewan $115
Yukon Territory $30

What are the Delays when Incorporating Non-Profit incorporation?

This depends on the jurisdiction of incorporation. Below are the current government incorporation approximate delays for non-profit corporations in Canadian jurisdictions:

Jurisdiction Standard
Processing
Expedited
Processing
(Additional fees apply)
Federal 30 days N/A
Alberta 10 days 5 days
British Columbia 40 days 20 days
Manitoba 30 days 15 days
Newfoundland 30 days N/A
New Brunswick 30 days 15 days
Nova Scotia 30 days N/A
Ontario 60 days 15 days
Quebec 26 days 12 days
Saskatchewan 30 days 15 days

How Many People are needed to incorporate a Non-Profit corporation?

Typically legislation requires at least 3 directors. Nova Scotia and British Columbia require 5 individuals. Only physical persons can be directors, no corporation may be a director.

How Do I select a Name?

Non-profit corporations must have a corporate name. The guidelines applying to business also apply to non-profit corporations.

Depending on the jurisdiction the name may or may not require that it end with “Inc.”, “Incorporated”, ”Incorporée”, “Corp.” or “Corporation”.

How do I apply to Obtain Charitable Status for my Non-Profit Corporation?

The Canada Customs and Revenue Agency (CCRA) (formerly Revenue Canada) is the government department responsible for granting organizations charitable tax status. The process routinely takes 6 months to 18 months and requires applicants to fulfill a number of requirements. One of the major advantages of obtaining charitable status is that the organization is able to issue receipts to donors for income tax purposes. This can be a major advantage when soliciting donations. In addition, charities receive certain tax exemptions. If an organization is created in Canada, is non-profit and is charitable in purpose, it may qualify as a charity within the meaning of the Income Tax Act. A non-profit corporation cannot issue tax-deductible receipts simply because it is a non-profit corporation. It must first submit an application and be accepted as having charitable status.

If you intend to apply to CCRA for charitable registration, we strongly suggest that you first contact CCRA first to confirm the use of the objects of your corporation. However, your organization’s use of proper objects is only part of Revenue Canada’s requirements for charitable registration. Revenue Canada must take other factors into consideration, including the activities and programs your organization undertakes to achieve its objects. For information on how to apply to Revenue Canada for charitable registration, you may wish to contact your local Revenue Canada office which can be found in the blue pages of your telephone book or call the Charities Division in Ottawa at (613) 954-0410, Toll – Free 1-800-267-2384.

I am incorporated. Is there anything else I have to do?

There are a number of administrative requirements, such as filing a Notice of Registered Office if there is a change and filing a Notice of Directors if there is a change in directors. However, the key requirement is to file an annual return and financial statements with the Corporations Branch each year.

You may decide to register with Revenue Canada and apply for GST numbers. To help you with this decision, contact an accounting professional and CCRA.

The content above is retrieved from corporationcentre.

Based on the BC government website. There are some information about the Directors of a society.

A director is an individual (not an organization or corporation) who meets specific qualifications and is responsible for the management of a society. An individual who applies to incorporate a society may become a director but this is not a requirement.

How Many?

An ordinary society must have at least three directors and at least one of the directors must be resident in B.C.

A member-funded society needs only one director, and the director does not need to be a B.C. resident.

Qualifications

A director must be qualified under the Societies Act and the bylaws of the society.

Generally this is an individual (not an organization or a corporation) who

  • Is at least 18 years of age (younger directors may be permitted under certain conditions)
  • Capable of managing their own affairs
  • Is not undergoing bankruptcy
  • Has not been convicted of fraud or corporate offence within the last five years
  • Meets any additional qualifications noted in the society’s bylaws

More information about he Not-for-profit Organizations in BC.

 

 

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