October 2, 2025 · Accounting and Bookkeeping

Non-Profit Organizations That Are Not Charities May Face Enhanced Reporting Requirements in 2026

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Often, Non-Profit Organizations (NPOs) and Charities are used interchangeably as they both enjoy tax-exempt status, while complying with certain reporting requirements. However, they have distinct legal definitions, requirements, and benefits. They both fall under separate rules of the Income Tax Act, have separate reporting requirements, and tax exemptions.

What Qualifies as a Non-Profit Organization

Taking an excerpt from the government’s website, “an NPO is any club, society, or association that is organized for social welfare, civic improvement, pleasure, or recreation or any other purpose except profit.” Compared to charities, NPOs have more flexibility in the purpose they serve. Moreover, they are not required to register with the Canada Revenue Agency (CRA).

NPOs can also receive donations, but the donor does not receive a tax advantage, unlike registered charities, which can issue tax receipts to donors for their donations.

The most significant difference between the two is the Reporting Requirements. Charities are subject to more stringent reporting requirements than NPOs. Charities must file Form T3010 to maintain their tax-free status. NPOs, on the other hand, have fewer reporting obligations. However, that could change in 2026 if the draft legislation is approved and becomes a law.

Reporting Requirements for Non-Profit Organizations

At present, NPOs that meet the threshold below are required to file T1044 Information Return within six months from the end of their fiscal period:

  • NPOs whose total passive income in the fiscal period exceeds $10,000. It includes interest, dividends, or rentals.
  • The organization’s total assets at the end of the preceding fiscal period exceeded $200,000; or,
  • The organization was required to file an information return for the preceding fiscal period.

NPOs that do not meet the threshold need not report anything. For corporate NPOs, they must file the T2 Corporation Income Tax Return, along with the T1044.

What Will Change for NPOs If Draft Legislation is Passed

First announced in the 2024 Fall Economic Statement, the Federal Government has proposed an amendment to the reporting requirements for NPOs to improve transparency. If this legislation is passed, starting in 2026, NPOs with gross annual revenues exceeding $50,000 will also be required to file a T1044 return. NPOs that do not meet the threshold will also be required to file a short-form return, which will include basic information. In short, all NPOs will have to file returns with the CRA.

Under T1044, the organization must report the following details and get it certified by an authorized officer. Details include:

  • A brief description of the NPO’s activities and whether they were carried on outside of Canada
  • The location of the NPO’s books and records.
  • Amounts received and remuneration during the fiscal period
  • A statement of assets and liabilities at the end of the fiscal period.

Non-profit organizations that do not meet the T1044 threshold must file a new short form return stating the basic information about the organization:

  • organization’s name and mailing address, business number/trust number 
  • names and addresses of directors, officers, trustees, or similar officials 
  • a brief description of the NPO’s activities and whether they were carried on outside of Canada
  • a statement of total assets and liabilities, and annual revenues 
  • other prescribed information.

Why Should NPOs Care About Draft Legislation

These return filings help the CRA ensure that the NPO is complying with the rules, allowing the organization to continue enjoying its tax exemption. If the CRA has any doubts, it may request additional information or clarification, which NPOs should respond to promptly to avoid complications.

NPOs should stay updated with changes in reporting requirements, as failure to file the above forms could result in penalties. In extreme cases, the NPO may also lose its tax-exempt status, which can lead to CRA audits and compliance checks.

Tip: NPOs should retain a copy of the completed form, along with the supporting financial documents used to complete it, for record-keeping purposes.

How You Can Prepare for Enhanced Filing Requirements

Whether or not the draft legislation becomes law, it is a good practice for an NPO to stay organized and maintain proper books of accounts throughout the year.

Remember, the T1044 filing becomes mandatory once your organization crosses the threshold. Without updated financial statements, investment records, and asset valuations, you will not know if your organization crossed the threshold.  

Contact Glenn Graydon Wright LLP in Oakville to Help Your Non-Profit Organization File Income Returns

A professional accountant can help you prepare financial statements and value assets annually, ensuring you stay compliant with all reporting requirements. At Glenn Graydon Wright LLP, our accountants and bookkeepers provide services that include filing income tax returns and preparing financial statements. To learn more about how Glenn Graydon Wright LLP can provide you with the best accounting and bookkeeping expertise, contact us by telephone at 905-845-6633 or connect with us online to schedule an initial consultation.