Whether your organisation uses the term ‘not-for-profit’ (NFP) or ‘non-profit’ (NPO), rest assured that both terms are acceptable ways of describing a non-profit body incorporated under the Canada Not-for-profit Corporations Act or constituted under Part III of the Quebec Companies Act. The CPA Canada accounting standards use the term ‘not-for-profit’.
Whether active in the professional, charitable, religious, cultural, social, philanthropic, athletic, educational, or other arenas, all NFPs are of a moral or altruistic nature and thus their objective is not to earn profits. These organisations are separate legal entities with their own rights and their own legal and moral obligations.
The rules of good governance require the officers and directors of these organisations to fulfill fiduciary duties. Their personal liability also comes into play, for example with regard to sales tax (GST/QST/HST). As an NFP, asset protection and the integrity of your financial information are crucial to maintaining your partners’ confidence.
Founders, officers, and directors of NFPs need to know that their organisation is not automatically exempt from taxes under the Income Tax Act. The provisions governing sales tax are often complex and difficult to interpret and apply, and the governments also impose reporting requirements on these organisations. Serious consequences may result from a failure to comply with the law.
Financial accounting and reporting standards for NFPs can be highly complex. Our assurance professionals have been auditing the financial statements of major professional bodies, charities, public and private foundations, and other NFPs for over 20 years, and our taxation and sales tax professionals’ advice continues to enable our NFP clients to comply with the tax laws in force in Quebec and the rest of Canada.
PSB Boisjoli is here to help your NFP meet the challenges it is facing.