A charity has considerable advantages under Canadian income
tax law. It is exempt from income tax. More important, it is
entitled to issue receipts for money that is donated to it. These
receipts entitle donors to tax advantage. But in return for these
considerable advantages there are many detailed rules that a
charity must follow. Three general items are important to consider.
- A charity can only do a limited range of things. It can advance
religion, relieve poverty, carry out education or undertake programs
and activities of benefit to the community that the law considers
charitable.
- A charity cannot engage in a range of activities which the
law considers political. This is a very restricted definition.
- A charity must follow detailed rules under the Income Tax
Act for spending money, receiving income and reporting.
