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Top Compliance Issues from the CRA Charities Directorate

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As part of the quarterly updates from the Charities Directorate, the CRA notes their top compliance issues from the 2023/24 year. We've summarized them here for you!

Books and records

Reason to educate - minor errors:

  • Non-material and/or unintentional errors and/or omissions in the books and records

  • Not having a travel log to support minor expenses

  • Not maintaining a copy of current governing documents

Examples of high-risk non-compliance:

  • Having no books and records available

  • Refusing to provide books and records

  • Committing culpable conduct (falsified books and records)

Official donation receipts

Reason to educate - missing minor elements:

  • A statement that it is an "official receipt for income tax purposes"

  • The place or locality where the receipt was issued

  • The name Canada Revenue Agency and the website address (canada.ca/charities-giving)

Examples of serious non-compliance:

  • Issuing falsified/fraudulent/inflated receipts

  • Issuing receipts for services

  • Lending registration number to other organizations

T3010 information return

Reason to educate - unintentional minor errors:

  • Allocating fundraising expenses to the wrong reporting line

  • Incorrectly reporting line 5010 “Total expenditures on management and administration”

Examples of intentional/serious errors:

  • Significant inaccuracies, beyond what is reasonably considered minor*

  • Willfully omitting information from the T3010 and/or financial statements

  • Failing to file a return as and when required (which results in a revocation for failure to file)

*Opportunities for the Disabled Foundation v MNR, 2016 FCA 94 at paras 50-51.

CRA typically addresses minor errors without an audit, through communications like education letters.

Audits tend to be reserved for situations where a high risk of potential non-compliance has been identified. CRA uses stronger corrective measures, such as sanctions or revocations, in cases of serious non-compliance.

If you’re concerned about the compliance of your books and records, read Finance for the Arts in Canada to learn all about best practices for keeping your books up to date and accurate.