Changes that require notification
Some changes do not require approval from the CRA, but do require that you notify them. In many instances it is strongly advised that your modifications be reviewed by a legal professional before being submitted to CRA.
- Changing your contact information. If you move your office or change your telephone, fax, or e-mail contact information, tell the CRA promptly by postal mail or fax. You can confirm that the change has been processed by reviewing your information in the CRA's Charities Listings.
- Changing your charity's legal name. If you change your charity’s legal name, or plan to operate under a different business name, you should tell the CRA. Do not issue receipts in the new name until CRA has approved it.
- Changing or adding charitable activities. When you first applied for charitable status, you listed the specific activities that your charity would undertake to fulfill its charitable objects. If your charity plans to start any new types of activities not mentioned in your original application, you should tell the CRA. They will advise you if your proposed activities are indeed charitable, and whether or not you will need to modify your charitable purposes.
- Changing your charity's purposes. If you plan on changing your charity’s legal objects or purposes, you may want to consult with the CRA about your planned change beforehand.
- Ceasing your charity's operation. If you no longer plan to operate your charity, you should ask the CRA to cancel your registration. This is known as a "voluntary revocation."
Changes that require CRA Approval
- Changing your fiscal year-end. You must receive the CRA's approval before you change your charity’s fiscal year-end. Your charity cannot have a reporting period of more than 12 months. When you change the year-end, you will have a short reporting period to bridge the time from your old to new year-end.
- Accumulating funds for a specific purpose. If your charity is planning a major project or activity (for example, constructing a building or buying expensive equipment), it may need to accumulate funds over more than one year. Since charities must generally spend 3.5% of the average value of investment assets every year on charitable activities, it could be difficult to put significant funds aside for such a project while still meeting the disbursement quota requirement. Tell the CRA the purpose of accumulating the funds, how much you need to accumulate, and how long you think it will take to accumulate them. Once they give their written approval, the funds your charity sets aside for the project or activity will be excluded from investment asset and disbursement quota calculations -- even though they are being invested pending their expenditure on a charitable project.
- Change your charitable designation. When your charity was first granted charitable status, it was designated as either a charitable organization, a public foundation, or a private foundation. If you disagree with this designation or later think that the designation should change, you can apply for re-designation.
When to Get Professional Help
There are times when charities may want or need professional advice. The following types of professionals may offer services that can help charities comply with Canada Revenue Agency (CRA) requirements.
Bookkeepers perform the routine, day-to-day task of recording transactions in a charity’s accounting records. This includes
- paying bills,
- depositing money received in the bank,
- recording transactions,
- preparing tax receipts,
- reconciling accounts, and so on.
Accountants generally pick up where bookkeepers leave off. They
- reconcile accounts,
- prepare and record adjusting entries in the accounting system,
- recommend and apply accounting policies and principles,
- prepare financial statements and related reports, and
- can also help to prepare and analyze budgets for charities.
Auditors perform an independent examination of a charity’s financial statements. They check the work of accountants by performing various tests and other procedures that are designed to see if the financial statements prepared by the accountants present the charity’s financial results “fairly.” Their job is to provide an objective opinion about the presentation of the financial statements that gives third parties (such as funders) assurance that the statements are reliable.
Legal professionals help new charities incorporate and register for charitable status, and advise and assist charities with the interpretation and application of the law, particularly in complex or uncommon situations. Lawyers may also help charities maintain their various corporate records, such as minutes and by-laws.
Appraisal and valuations professionals may be used to establish and document the fair value of large or unusual gifts in kind received by charities. One possible source of identifying qualified professionals would be to speak with an insurance broker in your area. Charities should carefully check the professional experience and credentials of appraisers.
Systems professionals can be of help when setting up accounting systems, particularly if these are computerized. It is important to have someone with the proper information technology and computer skills set up the actual accounting software and supporting hardware. It is also important to involve a qualified accountant, particularly when developing the chart of accounts.
Finding reputable professionals
The most effective means of finding professionals is to ask for referrals from trusted colleagues in other charities. They can give you the names of professionals who have performed to their satisfaction in a situation that is likely similar to your own. Once you have several names, you should interview prospective professionals to assess their relevant experience, abilities, and style.