How to Register a Charity in Canada: A Step-by-Step Guide

Every few months, someone sits across from me with a good idea, and a lot of questions. They want to start a charity. A food program, a counselling ministry, a church, a scholarship fund. They have the heart for it. What they do not have is a map. Their question is, “how?” 

Registering a charity in Canada can be challenging. It involves several steps, and they happen in a particular order. Miss the order, or fail to get one of the steps exactly right, and you can lose months redoing work.

In 2023-24, the CRA sent more than a third of charity applications back to the applicants due to being incomplete. When this happens, the clock stops while you fix the errors. While outright refusals are rare, delay is common, and it is almost always avoidable.

At Bussey Ainsworth, we help organisations get the structure and the purposes right the first time. The goal is an application that goes in complete and moves forward, instead of bouncing back months later. 

However, there are times even with the most excellent applications there are questions or inquiries from CRA that require further attention or revisions. Reasons for this include the increasingly political nature of charity registration. 

Our decades of experience helping organisations like yours have given us some hard-earned wisdom. So, here’s a crash course on exactly what’s involved in registering a charity in Canada, based upon our experience.

First, what a registered charity actually is

A registered charity is registered federally, with the Canada Revenue Agency. It is not registered with the province. While, constitutionally, provinces are given responsibility to regulate charitable organisations (and there are those who do keep watch on charities, such as Ontario and Quebec), when we talk about “registered charities” in Canada we are mostly talking about those charities that are registered under the federal Income Tax Act.

Once registered with the CRA, the charity can issue official donation receipts, and the charity is exempt from income tax. In return, it accepts real duties: annual filings, careful records, and limits on what it can do.

Understanding those limits is important. For example, a charity must devote its resources to its charitable purposes, and little else. While it can run a business, this is only when that business connects directly to its charitable work and the business is incidental to its work (with 90% of the business staff being volunteers). In other words, the charity’s work cannot be totally consumed by the business.

And while a charity can speak to public policy, it cannot support or oppose a political party or candidate. It cannot pass undue private benefit to its members or directors. And every receipt it issues has to follow the CRA's rules closely.

Clarification: A charity and a non-profit are not the same thing

One significant point of confusion is the difference between a non-profit and a charity. Many people use these words interchangeably. However, while every registered charity is a non-profit, not every non-profit is a charity.

A non-profit can form for almost any purpose that is not personal profit. A sports club, a trade association, a community group. It does not pay income tax on its activities. What it cannot do is issue official donation receipts for the donors to receive tax credit for the donation.

A registered charity is narrower. It has to exist for purposes the law treats as charitable, and it has to pass the CRA's tests. In exchange, it can issue receipts that let your donors claim a tax credit.

That receipting power is the heart of the difference. If you want your donors to receive a tax credit for their gifts, you need charitable status, not just non-profit status. Many groups come to me wanting one when they really want the other. Sorting that out early saves a great deal of time.

Now, on to the process of how to register a charity:

Step one: choose your legal structure

Before the CRA will look at you, you need a legal vehicle. Most groups incorporate.

In Ontario, that usually means incorporating under the Ontario Not-for-Profit Corporations Act, known as the ONCA. You can also incorporate federally.

Which one you choose comes down to where you plan to work. If your activities stay in a particular province, provincial incorporation is simpler. You answer to one regulator and file one set of returns. Federal incorporation suits groups that expect to operate or fundraise across several provinces. It protects your name across the country and signals a national presence. The trade-off is more paperwork.

Incorporation gives you a separate legal entity, a governance framework, and protection for the people who serve on your board. A few groups use a trust deed or an unincorporated association with a “constitution” instead. However, while those are simpler to start, they are harder to live with when it comes to personal liability.

Picture three friends in Peterborough (where our practice is located) who want to run a youth mentoring program. Incorporating protects them personally, and it gives funders a real entity to deal with as opposed to a larger group of individuals.

Step two: write charitable purposes that actually qualify

This is where most do-it-yourself applications fail.

The law recognises four kinds of charity: 

• the relief of poverty
• the advancement of education
• the advancement of religion 
• other purposes the courts have found to benefit the community.

Your purposes must fall inside those categories, be only charitable, and deliver a public benefit. Vague, sweeping, or political purposes get refused. The exact wording matters more than people expect.

I spend a lot of time here with clients. A clean purpose clause is the difference between approval and a year of back and forth.

Step three: apply to the CRA

You apply online, through the CRA's My Business Account. The old paper form that many people still search for has been replaced.

The application asks for your governing documents, a detailed description of your activities, and your proposed finances. Detailed is the key word. The CRA wants to know who, what, where, how, and with whose money.

Expect follow-up questions. The Charities Directorate often writes back asking for more. A strong first application reduces that, and the wait. Plan in months, not weeks.

We can be your appointed representative to the CRA and will draft the application for you. We will ask you all the questions that CRA asks, thereby avoiding unnecessary delays or rejection. It is like having an experienced guide beside you all the way.

Step four: once you are registered, the work continues

You receive a charitable registration number, and you can begin issuing donation receipts.

You must file an annual return, the T3010, within six months of your fiscal year-end. Miss it, and you put your status at risk. This is very important. While CRA gives warnings to get your T3010 filed, you must understand that CRA is serious. CRA will revoke charitable status if the T3010 is not filed in a timely manner.

You must also keep proper books and records, devote your resources to your charitable work, and follow the rules on receipting and on business and political activity. In Ontario, the Office of the Public Guardian and Trustee has a role overseeing charitable property as well.

Where people most often go wrong

You can do parts of this yourself, and many people do. But the two places clients stumble most are the structure and the purpose clause. Those are also the two hardest things to fix later.

I have spent much of my career in charity and non-profit law, including a decade as general counsel to a national association of charities. I have seen what makes an application sail through, and what makes it stall. There will always be issues to deal with, but over time I have learned to avoid most pitfalls. When they do arise, as they always do, I have a good idea how to solve them.

How we help with your charitable registration

Our job at Bussey Ainsworth is to do the heavy lifting where it counts, and to keep your application out of the traps that send it back as much as possible. While we are located in Peterborough, Ontario, this work has no borders, and we help charities across Canada.

We start by listening. Before any paperwork, I want to understand your mission and the work you actually do. The application has to reflect that, not a template.

Then we build the foundation. We advise on the right structure and incorporate you, provincially or federally, with governing documents that fit your plans.

Next comes the part that matters most. I draft your charitable purposes to meet the CRA's tests, so they read as clear, charitable, and ready to approve.

We prepare and file the full application, then manage any back and forth. When the Charities Directorate writes back with questions, and it often does, we answer them.

We do not disappear at registration. We make sure you know what your annual T3010 filing and your record-keeping will require, so your status stays secure.

You bring the vision. We keep the law from getting in its way.

If you are thinking about starting a charity, I would be glad to talk it through. You can book a consultation here.

Barry W. Bussey, Ph.D. (Leiden), has practised law for over 30 years. During that time, he served for ten years as Director of Legal Affairs for a national charity-sector association, appeared at every level of the judiciary, including five times before the Supreme Court of Canada, and taught as an adjunct law professor. He practises real estate, wills and estates, charity, and non-profit law in Peterborough with Bussey Ainsworth.

This article is for general information only and does not constitute legal advice. Charity registration depends on your organisation’s specific facts. Please consult a lawyer before applying for charitable status.