A non-profit organization (NPO) is incorporated under Part I of the Income Tax Act and is exempt from tax on all or part of its income in a fiscal period if all the following conditions are met:
- It is operated for the sole purpose of social welfare, civic improvement, pleasure or recreation or any purpose other than to earn profit;
- No part of its income is payable to or made available for the personal benefit of a proprietor, member or shareholder, unless the proprietor, member or shareholder was a club, society or association the primary purpose and function of which was the promotion of amateur athletics in Canada.
The T1044 information return may be required for an NPO that is either:
- a non-profit organization described in paragraph 149(1)(l) of the Income Tax Act; or
- an agricultural organization, a board of trade or a chamber of commerce described in paragraph 149(1)(e) of the Income Tax Act.
NPOs described under 149(1)(l) would include clubs, societies, associations, housing corporations, marina corporations and which were not a registered charity.
These NPOs only have the obligation to file the T1044 if:
- it received or was entitled to receive taxable dividends, interest, rentals, or royalties totalling more than $10,000 in the fiscal period; or
- the total assets of the organization were more than $200,000 at the end of the immediately preceding fiscal period (the amount of the organization’s total assets is the book value of these assets calculated using generally accepted accounting principles); or
- it had to file a T1044 information return for a previous fiscal period.
If a T1044 information return is required to be filed, the due date is no later than 6 months after the fiscal year end. If the return is filed past the due date, the basic penalty is a minimum of $100 and $25 per day up to a maximum of $2,500. This penalty is applicable to each year where the T1044 was required but not filed.
Fortunately, there is tax relief. If an NPO meets the above requirements and has failed to file the T1044 in previous fiscal periods, voluntary disclosure is available. The disclosure must meet the requirements that it is voluntary, complete, the information is past due and penalties would apply.
The voluntary disclosure provides the means to clear out past penalties for a maximum of 10 prior fiscal periods and ensures that the NPO establishes internal administrative policies to file the information return within the normal deadline for future fiscal periods.
WE ARE HERE TO HELP
If you need more information either about filling out/filing a T1044 information return or any other NPO-related tax or accounting matter, please contact a member of our NPO Team.