Do Non-Profits Pay Taxes in Canada?
If you’re starting or running a non-profit organization, one of the most common questions is: “Do non-profits pay taxes in Canada?”
It’s a great question—and the answer isn’t just yes or no. It depends on a few things, like what your organization does, whether it's registered as a charity, and how it handles its money.
In this blog post, we’ll break it down in a way that’s simple, clear, and relevant to real Canadian nonprofits and charities. Whether you're helping youth in your community, operating an animal rescue charity, running a church, mosque or temple, or supporting a cultural group, this guide is for you.
What Is a Non-Profit Organization?
Before we talk about taxes, let’s understand what a non-profit organization (NPO) actually is.
A non-profit is a group that exists to support a cause or serve a community, not to make a profit for owners or shareholders. Any money it earns goes back into the organization’s mission.
Examples:
- A soccer club that runs youth leagues in your town.
- A local arts centre that offers free art classes.
- A food bank that supports low-income families.
These organizations aren’t trying to get rich—they’re trying to help.
So… Do Non-Profits Pay Taxes in Canada?
In general, non-profits do not pay income tax, as long as:
- They operate only for social, educational, religious, or community purposes, and
- None of their profits benefit members, directors, or shareholders.
If your nonprofit sticks to its purpose and uses its money to serve its mission—not individuals—you likely won’t owe federal or provincial income tax.
BUT—and this is important—not all taxes are off the table.
Do Nonprofits Pay Local Taxes?
Well, sometimes.
Even if your nonprofit doesn’t pay income tax, you may still be on the hook for other taxes, such as:
- Property Taxes: These are set by local governments. Some cities only offer exemptions to registered charities, not all nonprofits. And some municipalities offer only a partial property tax rebate to nonprofits and charities.
- Payroll Taxes: If you have employees, you’re responsible for things like CPP, EI, and withholding income tax, just like any other employer.
- GST/HST: Most nonprofits still pay sales tax, though most are eligible for partial rebates.
So when people ask, “Do nonprofits pay local taxes?” The answer is: It depends on your location and status.
What About Registered Charities?
A registered charity is a special type of nonprofit that’s been approved by the Canada Revenue Agency (CRA) to carry out certain charitable purposes, like:
✅ Helping people in poverty
✅ Promoting education
✅ Supporting religion
✅ Benefiting the community in a legally recognized way
Once approved, registered charities get more tax advantages than regular nonprofits.
Tax Benefits for Registered Charities:
✅ Can issue official donation receipts (which attract more donations)
✅ May qualify for property tax exemptions
✅ Eligible for GST/HST rebates
✅ Access to more grants and public funding
Becoming a registered charity is a great option for organizations with a public benefit focus, but it comes with more rules, annual filings, and stricter oversight.
Real-Life Example
Let’s say there’s a community group in Toronto that offers free tutoring to newcomer students. At first, they’re just a nonprofit—they don’t pay income tax, but they do pay GST and partial property tax on their rented space.
Later, they apply to become a registered charity. Once approved:
- They remain exempt from income tax.
- They can issue tax receipts, which encourages more donations.
- Their municipality may give them a full property tax exemption.
- They qualify for new government grants and CRA rebates.
Their costs go down, their donations go up, and they’re better able to grow their programs.
What Are the Benefits of a Non-Profit Organization in Canada?
Whether you’re a registered charity or not, there are many advantages to running a nonprofit in Canada:
✅ Tax Relief : Most nonprofits don’t pay income tax, and charities get even more exemptions.
✅ Legal Protection : If you incorporate, your organization becomes a separate legal entity. That means directors and volunteers are usually protected from personal liability.
✅ Public Trust : Nonprofits and charities are seen as more trustworthy, especially when their finances and goals are transparent.
✅ Funding Opportunities : Many funders—especially governments and large foundations—only fund nonprofits or registered charities.
✅ Volunteer and Donor Support : People are more likely to volunteer or donate to causes that are officially structured and recognized.
To sum it up:
Do non-profits pay taxes in Canada?
Mostly no—they don’t pay income tax if they operate properly and for public purposes.
Do nonprofits pay local taxes?
Sometimes, they may still owe property tax unless they’re a registered charity with exemptions.
Do non-profits pay taxes like GST or payroll taxes?
Yes, in most cases, unless eligible for rebates or exemptions.
Knowing the difference between a nonprofit and a charity—and how taxes work—can help your organization avoid problems and take full advantage of benefits.
Need Help Getting Started?
Starting a nonprofit or applying for charitable status can feel confusing. That’s where we come in.
At B.I.G. Charity Law Group, we help Canadians register nonprofits and charities with clear, fixed-fee legal support—no hidden costs, no confusion. Just a fast, simple, and reliable path to get your organization off the ground and officially registered with the CRA.
🎯 Book a complimentary consultation to find out the best and fastest way to register your nonprofit or charity in Canada.
Contact Us
☎️ 416-488-5888
Let’s make your mission official.
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