AnalyticalChurch.ca - Will the government shut us down if we aren't careful

Will the government shut us down if we aren't careful?

Statistics on the Revocation of Registered Charitable Status in Canada (June 1, 2023)

Administrators of Canadian charities can be nervous about running afoul of federal government requirements for maintaining registered charity status. It is a critical thing considering that unregistered charitable organizations cannot issue tax receipts for donations, which significantly decreases their ability to raise revenues.

Charity registration falls to the Canadian Revenue Agency. More commonly called CRA, they can instill a feeling of paranoia when they first make contact. As is my experience, this mostly goes away after you have some experience with Agency staff as they tend to be very helpful and reasonable; more so when it comes to matters relating to charities.

But, what about the dreaded audits? How many charities have been brought down by this means? How many churches? The short answer to this is very few. First, let’s look at how many audits the CRA does each year on charities. According to Blumbergs Canadian Charities Law website1, audits have steadily dropped since 2013-14. That year they completed 845 audits. In 2020-21 they completed 142. To allow for any impact by Covid, consider that in pre-Covid 2018-19, they completed only 279. To put this in perspective, in December 2022 CRA listed around 86,000 registered charities.

Let’s now look at the revocation of registered charity status by the CRA. The following table provides numbers to December 2022 that I gathered from searches of CRA’s online charities list2.

It is unclear from the online listing what the time-span is for these numbers on revocations, but I can tell that it goes back several years. These are definitely not annual figures.

You can see that forced revocation is a relatively rare occurrence. A large number are voluntary, suggesting an orderly closing down of a charity by its members. A large number are due to failure to file the annual T3010 and any other requested information, suggesting a less orderly cessation by the charity. These do not represent drastic measures by the CRA. To my understanding, the CRA is patient with charities in collecting their annual returns. I do not believe there are ‘gotcha’ situations relating to returns that are just days or weeks overdue.

That leaves revocation due to audits and ‘other.’ Both are small numbers, considering they occurred over a span of many years. Also, anecdotally knowing how many charities struggle with record-keeping, control systems, payroll laws and government filings, the small number of deregistrations indicates that the CRA is patient and willing to work with charities to put things right.

Actually, there are figures for this too. In 2017-18 they started providing charity education programs that saw 452 such events in pre-Covid 2018-19. Further, they have started performing less invasive ‘non-audit interventions’. These totaled 263 in 2018-19 and are not as onerous. I experienced one of these directly when the CRA did a review of payroll practices at a church I volunteered in. It went very well and the CRA auditor was very pleasant and helpful.

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1. Blumbergs Canadian Charities Law, Dramatic changes to charity audits by CRA over the last few years,

https://www.canadiancharitylaw.ca/blog/dramatic-changes-to-audits-by-cra-over-the-last-few-years/

2. Canada Revenue Agency, List of charities and certain other qualified donees,

https://apps.cra-arc.gc.ca/ebci/hacc/srch/pub/dsplyBscSrch?request_locale=en