Maintaining Registered Charity Status: Key Compliance Requirements — CPA Firm Near You, Montreal

Introduction

Registered charities in Quebec receive powerful tax advantages — including the ability to issue donation receipts and exemption from income tax. But these benefits come with strict compliance obligations set by CRA and Revenu Québec. Failure to meet these requirements can result in penalties, suspension of receipting privileges, or even revocation of charitable status. This guide explains the core compliance rules charities must follow and how a CPA firm near you in Montreal can help protect your charitable status.

Legal and Regulatory Framework

Under the Income Tax Act, registered charities must comply with several ongoing requirements:

1. Charitable Purpose and Activities

A charity must operate exclusively for charitable purposes, such as:
• Relief of poverty
• Advancement of education
• Advancement of religion
• Other community-benefit purposes

Charities must devote their resources to programs aligned with these purposes.

2. Annual Filing: T3010 Charity Information Return

Filed within 6 months of fiscal year-end, including:
• Financial statements
• Program descriptions
• Donation receipt totals
• Governance information

Late filings may result in suspension or revocation.

3. Disbursement Quota (DQ) Requirements

Charities must spend a minimum portion of their assets each year on charitable activities or gifts to qualified donees. CRA currently requires a DQ of 5% of certain assets.

4. Donation Receipting Rules

Charities must:
• Issue receipts only for eligible gifts
• Follow strict CRA formatting requirements
• Maintain detailed donor and receipt records
• Value non-cash donations correctly

Improper receipting is a major cause of deregistration.

5. Books, Records, and Governance

Charities must maintain:
• Complete financial records
• Minutes of board meetings
• Governing documents (bylaws, letters patent)
• Policies for conflicts of interest, compensation, fundraising

6. Foreign Activities

Charities operating abroad must maintain direction and control over foreign projects and partners.

Key Court Decisions

Courts have ruled that:
• Charities must demonstrate clear charitable purpose and documentation
• Repeated T3010 filing failures justify revocation
• Ineligible receipts or inflated valuations constitute grounds for sanctions
• Poor record-keeping undermines the charity’s credibility and may trigger audits
• Excessive accumulation of assets without program spending violates DQ rules

Judges stress transparency, documentation, and adherence to charitable mandates.

Why CRA and Revenu Québec Target Charities

Audits are common because charities often:
• Issue improper donation receipts
• Miss T3010 filing deadlines
• Fail to meet disbursement quota requirements
• Mix charitable and non-charitable expenses
• Lack governance documents or policies
• Run foreign programs without proper controls
• Pay excessive compensation or engage in related-party transactions

Auditors review board minutes, financial statements, receipts, bank deposits, and project files.

Mackisen Strategy

At Mackisen CPA Montreal, we help charities maintain long-term compliance. We:
• Review and strengthen governance structures
• Prepare T3010 filings accurately and on time
• Monitor and calculate disbursement quota requirements
• Audit donation receipting practices
• Reconcile financial statements and program spending
• Develop foreign activity oversight documentation
• Train board members and volunteers in compliance
• Prepare audit-defense packages for CRA reviews

Real Client Experience

A Montreal charity faced suspension after missing multiple T3010 filings. We filed outstanding returns, corrected receipting issues, and re-established compliance. Another charity’s foreign projects lacked direction and control documentation; we built full compliance records and prevented revocation.

Common Questions

What happens if a charity misses a T3010 filing?

Receipting privileges may be suspended, and repeated failures lead to revocation.

How much must a charity spend on programs annually?

At least 5% of certain assets (disbursement quota requirement).

Can charities operate abroad?

Yes — but strict direction and control rules apply.

What records must charities keep?

Financial statements, donor records, receipts, minutes, payroll, and governance documents.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps charities maintain compliance, avoid penalties, and protect their charitable status. Whether running local programs or international initiatives, our expert team provides precision, governance, and long-term audit protection.