Income Tax Act S. 149.1(4.1) — Revocation of a Registered Charity

The Minister may, in the manner described in section 168, revoke the registration

• (a) of a registered charity, if it has entered into a transaction to avoid or unduly delay expenditure on charitable activities;
• (b) of a registered charity, if it assisted another registered charity in avoiding or unduly delaying expenditure on charitable activities;
• (c) of a registered charity, if a false statement was made in the furnishing of information for the purpose of obtaining registration;
• (d) of a registered charity, if it received a gift from another non-arm's-length registered charity and failed to expend the fair market value before the end of the next taxation year;
• (e) of a registered charity, if an ineligible individual is a director, trustee, officer or like official, or controls or manages the charity; and
• (f) of a registered charity, if it accepts a gift from a listed foreign state under the State Immunity Act.

What This Means for Your Registered Charity

Section 149.1(4.1) addresses a specific set of serious compliance failures that go beyond simple administrative errors. These include structured transactions designed to avoid spending on charitable purposes, fraud in the registration process, control by ineligible individuals, and accepting gifts from designated foreign states.

Of particular note is clause (e) — the ineligible individual rule. An ineligible individual includes anyone convicted of a tax offence, someone who controlled a previously revoked charity, or a person who made false statements to the CRA. Having an ineligible individual on your board — even unknowingly — can trigger revocation. B.I.G. Charity Law Group advises charities on director eligibility screening and governance structures. Contact us for a board governance review.

Frequently Asked Questions

Who is an ineligible individual under the Income Tax Act?

An ineligible individual includes anyone convicted of a relevant criminal offence, a person who was a director of a charity that had its registration revoked for cause within the past 5 years, or anyone who made false or misleading statements to the CRA in connection with a charity.

What is a listed foreign state for the purposes of this section?

A listed foreign state is a country designated under the State Immunity Act as supporting terrorism. Charities are prohibited from accepting gifts from such states.