Filing an Information Return Form for a Not-for-Profit Organization

March 4, 2016 Published by
Post Categories: Tax Accounting • HSS Blog
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Canada makes a specific distinction between charitable organizations and not-for-profit organizations, commonly known as NPOs.  NPOs encapsulate a variety of groups such as clubs, societies, and associations as well as agricultural organizations such as farmers markets. Once an organization has filed an NPO information return for a fiscal period, it must file an information return for all subsequent fiscal periods, as long as it remains an NPO and regardless of the dollar value of its revenues or the book value of its assets in those later years.

Most Common Mistake

The most common mistake NPOs make with regard to this form is failing to file it. This often occurs in smaller clubs or societies where the leadership changes on a frequent basis, such as annually or bi-annually. Filing the T1044 form is a responsibility that is often forgotten or is mistakenly believed to be unnecessary due to changes in the organization. However, once an NPO has filed this form it must do so every year unless they drop their NPO status.

Tips for T1044 Success

Although this is a fairly basic and straightforward form, there are a few tips for making this process smooth and successful.

  1. Create a specific procedure within the NPO for organizing the necessary information needed to complete this form.
  2. Assign a specific person/title to manage the responsibility of completing and mailing the form.
  3. Assure that all committee chairs, treasurers, or leaders who document income from fees, events, or donations, know how to properly record the information so it is available for later use.
  4. Create a specific description of the NPO for use on this form to avoid inconsistencies from year to year.

The goal is to have all of the data needed to complete the form easy to locate and use when needed. If your NPO can afford the cost, the best solution may be to hire an accounting firm to manage this process.

Failure to file this form can result in a $25/day fine for a maximum of $2,500 per year. Take the necessary steps to file this for to avert financial disaster for your NPO.

Need some help? Learn more about how Hogg, Shain & Scheck can help your Not-for-Profit Organization with specialized NPO accounting requirements. See Accountants for Not-for-Profit Organizations.