CRA Non-Profit Organization Audit — Montreal CPA Firm Near You: NPO Compliance Review

A CRA Non-Profit Organization (NPO) Audit examines whether your club, association, or professional society qualifies for tax-exempt status under section 149(1)(l) of the Income Tax Act. While NPOs don’t pay income tax, they must meet strict rules: no private benefits, no profit motive, and proper use of surpluses.
Mackisen CPA Montreal provides full audit representation, governance review, and compliance restoration to ensure your organization passes CRA scrutiny and retains its exemption — protecting your mission, reputation, and future funding.

Legal Foundation

Law: Income Tax Act s.149(1)(l) — exemption for organizations operated exclusively for social welfare, civic improvement, recreation, or non-profit purposes; s.230(2) — record-keeping obligations.
Jurisprudence: Tourism Industry Association of Canada v. Canada (1994 TCC) — confirmed that incidental profits do not disqualify an NPO, but funds must be used to further non-profit objectives.

Learning insight: CRA audits NPOs not because they earn money — but because they must prove they don’t earn it for anyone.

Why CRA Targets Non-Profit Organizations

CRA and Revenu Québec target organizations that accumulate excess surpluses, pay benefits to members, or operate commercial ventures without reinvesting profits. Common audit triggers include:

• Large retained earnings with no defined purpose.

• Payments to directors, officers, or members.

• Commercial activities competing with for-profit businesses.

• Missing or late T1044 filings.

• Inconsistent accounting between years.

Learning insight: CRA’s test for NPO status is simple — “Who benefits?” Mackisen CPA ensures the answer is “The community, not the members.”

CRA’s NPO Audit Process

1. Information Request: CRA asks for financial statements, by-laws, and membership lists.

2. Governance Review: CRA examines board minutes, budgets, and operational policies.

3. Revenue Source Testing: CRA differentiates member dues, sponsorships, and commercial income.

4. Expense Verification: Auditors ensure funds are used for non-profit activities.

5. Final Determination: CRA confirms compliance or revokes NPO status retroactively.

Learning insight: CRA’s focus isn’t just accounting — it’s accountability. Mackisen CPA documents both.

Mackisen CPA’s NPO Audit Defense Framework

1. Purpose Review: Analyze the organization’s constitution, bylaws, and mission statement for compliance.

2. Financial Reconciliation: Match revenues and expenses to activities that fulfill non-profit objectives.

3. Surplus Justification: Demonstrate that retained funds are earmarked for specific future projects.

4. Governance Oversight: Verify board decisions, elections, and conflict-of-interest disclosures.

5. T1044 Filing Review: Correct and file all overdue or inaccurate information returns.

Learning insight: A strong NPO audit defense is built on three pillars — purpose, process, and proof. Mackisen CPA secures all three.

Common CRA Findings in NPO Audits

• Retained surpluses not tied to future program funding.

• Payments to members disguised as reimbursements.

• Business ventures unrelated to the NPO’s mission.

• Missing documentation for grants or subsidies.

• Ineligible expense deductions or cash transactions.

Mackisen CPA Montreal resolves these issues by aligning your governance, documentation, and accounting systems with CRA’s expectations.

Learning insight: CRA doesn’t revoke status for honest mistakes — only for unproven missions. Mackisen CPA turns your mission into measurable compliance.

The Financial and Legal Impact of Non-Compliance

If CRA revokes your NPO exemption:

• The organization becomes taxable as a regular corporation.

• Past income may be reassessed retroactively.

• Funding from government or foundations may be suspended.

• Directors may face fiduciary liability for misused funds.

Learning insight: An NPO audit is a test of transparency, not tax. The clearer your story, the stronger your protection.

SEO Optimization and Educational Value

Primary Keywords: CRA Non-Profit Organization Audit, NPO Compliance Canada, Mackisen CPA Montreal, CPA Firm Near You, T1044 Audit Defense, Non-Profit Governance Audit.
Secondary Keywords: CRA NPO revocation, Revenu Québec NPO audit, Mackisen CPA non-profit review, NPO status CRA, non-profit tax exemption Canada.

Learning insight: Search engines reward expertise — CRA rewards documentation. Mackisen CPA delivers both in every audit file.

Real Client Success

• A Montréal community association retained its NPO status after Mackisen CPA proved its surpluses were reserved for a multi-year facility renovation.

• A sports federation avoided $60,000 in back taxes after we demonstrated all sponsorship funds supported youth programming.

• A cultural non-profit passed its CRA audit after our team rebuilt three years of T1044 filings and reconciled all donations to expenditures.

Learning insight: Every successful CRA audit is built on one factor — organization. Mackisen CPA turns scattered files into structured compliance.

Why Mackisen CPA Montreal

Mackisen CPA Montreal combines 35 years of experience in taxation, non-profit governance, and CRA audit defense. Our bilingual team serves community organizations, associations, unions, and professional societies across Québec.
We help you prove that your NPO’s structure, activities, and finances meet both the letter and the spirit of the law.

Learning insight: CRA audits your records — donors audit your integrity. Mackisen CPA protects both.