What is Form T1044, and Do Charities in Canada Need to File It?

Running a nonprofit in Canada requires understanding the various financial forms that need to be filed with the Canada Revenue Agency (CRA). One such form is Form T1044, which can sometimes cause confusion.

In this guide, we'll cover when nonprofits need to file Form T1044, key differences from other tax forms, filing deadlines, common mistakes to avoid, and what happens if you miss the deadline. We'll also answer frequently asked questions to help your organization stay compliant with CRA requirements.

This article will explain what Form T1044 is, who needs to file it, why it's important, and how to file it, making sure it’s all easy to understand and applicable to nonprofits and organizations in Canada.

What is Form T1044?

Form T1044 is a specific return called the "Non-Profit Organization (NPO) Information Return," which is required by the CRA for certain tax-exempt organizations in Canada. It gathers important financial information about the organization to ensure it complies with Canadian tax rules. Form T1044 is different from the T3010 form that registered charities must file.

Key Differences Between Form T1044 and T3010

Understanding which form your organization needs to file is crucial for CRA compliance. Here's how T1044 and T3010 differ:

Key Takeaway: Registered charities file T3010, not T1044. However, some nonprofit organizations that are not registered charities must file T1044 if they meet the asset or income thresholds. An organization cannot be both a registered charity and required to file T1044 for the same activities.

Who Needs to File Form T1044?

The T1044 form is not required for all non-profit organizations. Generally, an organization must file this form if it meets these criteria:

1. It is a non-profit organization: This includes social clubs, recreational groups, or any other entity that doesn’t aim to generate profits for its members.
2. It has had assets of over $200,000 at any time during the fiscal year: If the organization’s total assets exceed this threshold, it must submit Form T1044.
3. It received more than $10,000 in income: This includes interest, dividends, or rentals. If the organization earned more than this amount during the fiscal year, filing the form is mandatory.

Organizations that meet these conditions are expected to submit the T1044 return. It’s important to note that not all nonprofits fall under these criteria, so it’s essential to review the organization's financial situation carefully.

Organizations Exempt from Filing T1044

Not every nonprofit in Canada needs to file Form T1044. Your organization is exempt from filing if:

Organizations Below the Thresholds:

• Total assets remained under $200,000 throughout the entire fiscal year, AND
• Investment income (interest, dividends, rentals) was $10,000 or less for the fiscal year

Registered Charities:

• Organizations registered with the CRA as charities file Form T3010 instead and do not file T1044

Qualified Donees:

• Registered Canadian amateur athletic associations (RCAAAs)
• Registered journalism organizations (RJOs)
• These organizations have their own filing requirements

Organizations Filing Other Returns:

• NPOs that file a T2 Corporation Income Tax Return for a taxation year don't need to file T1044 for that same year

Important Note: Even if your organization was previously exempt, you must reassess your filing requirements annually. If your assets grow or your investment income increases beyond the thresholds, you'll need to file T1044 for that fiscal year.

If you're unsure whether your organization qualifies for an exemption, contact a charity and nonprofit lawyer or tax professional familiar with CRA regulations.

Why Is Filing Form T1044 Important?

Filing the T1044 is critical for staying in compliance with CRA regulations. If an organization fails to submit this form when required, there could be significant consequences:

• Penalties: Organizations that do not file this form on time may face financial penalties. These penalties can accumulate quickly, putting a financial strain on the organization.
• Loss of tax-exempt status: In extreme cases, failing to file the required forms may cause the organization to lose its tax-exempt status. This would mean the organization could be taxed on its income, undermining its financial health.
• Increased CRA scrutiny: If an organization regularly fails to meet its filing requirements, it may attract additional scrutiny from the CRA, leading to audits or other compliance checks.

How to File Form T1044?

Filing the T1044 form can seem complex, but the CRA provides guidelines to simplify the process. Here are the steps to follow:

1. Download the form: You can access Form T1044 on the CRA’s website here.
2. Gather required information: To fill out the form, you'll need accurate records of the organization’s financial activities for the fiscal year. This includes:
   • The total value of the organization’s assets
   • Details on any income received, such as interest or rental income
   • The organization’s financial statements
3. Complete the form: Carefully fill in the required information, ensuring all financial data is correct.
4. Submit the form: Once completed, submit the form by mail to the address provided on the CRA website. It is important to send the form by the deadline, which is six months after the end of the organization's fiscal year.
5. Keep a copy: Always keep a copy of the completed form and the financial documents used to complete it for your records.

Need clarity on annual federal filing requirements? Compare key obligations in our guide to T1044 and T3010 so your charity stays compliant year-round.

Important Filing Deadlines for T1044

The Standard Deadline:

Form T1044 must be filed within six months after the end of your organization's fiscal year-end. This is a firm deadline that applies regardless of your organization's size or structure.

Deadline Examples:

• Fiscal year ends December 31, 2024 → T1044 due by June 30, 2025
• Fiscal year ends March 31, 2025 → T1044 due by September 30, 2025
• Fiscal year ends September 30, 2024 → T1044 due by March 31, 2025

Weekend and Holiday Rules:

If your filing deadline falls on a Saturday, Sunday, or public holiday recognized by the CRA, your return is considered on time if the CRA receives it or it is postmarked on the next business day.

First-Time Filers:

If your organization is filing Form T1044 for the first time because it has crossed the asset or income thresholds, the same six-month deadline applies from your fiscal year-end.

Pro Tip: Don't wait until the last minute. Mail delays can cause your return to arrive late even if you send it before the deadline. Consider mailing your T1044 at least two weeks before the due date to account for postal delays.

Common Mistakes to Avoid When Filing Form T1044

Many nonprofits make avoidable errors when filing T1044. Here are the most common mistakes and how to prevent them:

1. Incorrect Asset Valuation

Organizations often miscalculate their total assets by forgetting to include all property, investments, and receivables. Remember to include the fair market value of all assets, not just cash and bank accounts.

2. Missing Income Sources

Some organizations fail to report all sources of investment income. Include all interest from bank accounts and investments, dividend income, rental income from property, and capital gains from asset sales.

3. Late Filing

Missing the six-month deadline is one of the most common mistakes. Set calendar reminders well in advance of your deadline and build in time for preparation and review.

4. Incomplete Financial Statements

The CRA requires complete and accurate financial statements. Ensure your statements are prepared according to Canadian accounting standards and include all required schedules and supporting documentation.

5. Not Updating Contact Information

If your organization has moved or changed its contact person, failing to update this information on the form can lead to missed CRA correspondence. Always verify that your current mailing address and contact details are correct on the form.

6. Assuming Exemption Without Verification

Some organizations assume they don't need to file without carefully checking the thresholds. Review your financial position every year to confirm whether filing is required.

7. Using Outdated Forms

The CRA occasionally updates Form T1044. Always download the most current version from the CRA website rather than using a saved copy from previous years.

How to Avoid These Mistakes:

Maintain detailed and accurate financial records throughout the year, conduct internal reviews before filing, and consider having a charity and nonprofit lawyer or accountant review your completed form before submission.

What Happens After Filing?

Once Form T1044 is submitted, the CRA will review it to ensure the organization meets the necessary requirements for tax-exempt status. If any issues arise, the CRA may request additional information or clarification. It’s important to be responsive to these requests to avoid further complications.

What to Do If You Miss the T1044 Filing Deadline

If your organization has missed the T1044 filing deadline, don't panic. Taking prompt action can help minimize penalties and compliance issues.

Step 1: File Immediately

Even if you've missed the deadline, file your T1044 as soon as possible. Late filing is better than not filing at all. The $25 per day penalty is capped at $2,500, so filing late will stop the penalty from continuing to accumulate.

Step 2: Include an Explanation Letter

When you submit your late return, include a cover letter explaining:

• Why the return was filed late
• What steps you've taken to prevent future late filings
• Any extenuating circumstances (illness, organizational changes, etc.)

Step 3: Consider Voluntary Disclosure

If your organization has multiple years of unfiled returns, you may be eligible for the CRA's Voluntary Disclosures Program. This program can reduce or eliminate penalties if you come forward before the CRA contacts you.

Step 4: Pay Any Assessed Penalties Promptly

If the CRA assesses penalties or interest charges, pay them as quickly as possible to avoid additional interest accumulation.

Step 5: Set Up Systems to Prevent Future Late Filings

• Create a compliance calendar with filing deadlines
• Assign responsibility for tax filings to a specific board member or staff person
• Set up reminders at 8 months, 5 months, and 1 month before your deadline
• Consider hiring a bookkeeper or accountant to manage filing requirements

Repeated Late Filing:

If your organization repeatedly files late, the CRA may increase scrutiny of your nonprofit, potentially leading to audits or challenges to your tax-exempt status. Establishing reliable filing systems is crucial for long-term compliance.

When to Seek Legal Help:

If you've missed multiple years of filings or have received correspondence from the CRA about unfiled returns, consult with a charity and nonprofit lawyer immediately to protect your organization's tax-exempt status.

Do Charities Need to File T1044?

Registered charities in Canada file a different form called the T3010, which is the annual Registered Charity Information Return. However, organizations that are classified as non-profits but not registered charities (or "Qualified Donees" as it is called in legal and CRA parlance) as may still need to file the T1044. It is important to distinguish between different types of organizations to determine the correct forms required by the CRA.

Best Practices for Filing Form T1044

• Stay organized: Maintaining detailed and accurate financial records throughout the year will make it easier to file the T1044 and avoid mistakes.
• Consult a professional: If your organization is unsure about whether it needs to file the T1044 or how to complete it, consider consulting with a tax professional or an experienced charity and not-for-profit lawyer who is familiar with CRA regulations for charities and non-profits.
• Monitor asset and income thresholds: Regularly review the organization's financial status to ensure it does not surpass the $200,000 asset or $10,000 income thresholds unexpectedly, which would trigger the need to file the form.

Conclusion

Filing Form T1044 is an important responsibility for many nonprofits in Canada. While not all organizations need to file this form, those that do must ensure they meet the filing requirements to avoid penalties, maintain their tax-exempt status, and stay compliant with CRA regulations.

By understanding the filing process, knowing the deadlines, avoiding common mistakes, and staying proactive, organizations can ensure a smooth filing experience. If you're ever uncertain about your filing obligations or need assistance with CRA compliance, don't hesitate to consult with a charity and nonprofit lawyer who can provide expert guidance tailored to your organization's needs.

Need Help With Form T1044 or Nonprofit Compliance?

Filing Form T1044 and maintaining CRA compliance can be complex. If your organization needs guidance on filing requirements, has missed deadlines, or is facing CRA scrutiny, our experienced charity and nonprofit lawyers can help.

Contact Charity Law Group today:

• Phone: (416-488-5888)
• Email: dov.goldberg@charitylawgroup.ca
• Book a Consultation: https://calendly.com/dov-goldberg/schedule-a-free-consultation

We provide comprehensive legal support for nonprofits and charities across Canada, including assistance with CRA forms, compliance issues, tax-exempt status protection, and nonprofit governance.

Frequently Asked Questions About Form T1044

What is Form T1044 used for?

Form T1044, the Non-Profit Organization (NPO) Information Return, is used by the Canada Revenue Agency to gather financial information from tax-exempt nonprofit organizations. It helps the CRA verify that qualifying nonprofits continue to meet the requirements for tax-exempt status under the Income Tax Act.

Do all nonprofits in Canada need to file T1044?

No. Only nonprofits that have assets exceeding $200,000 at any point during the fiscal year OR investment income (interest, dividends, rentals) exceeding $10,000 for the fiscal year must file T1044. Nonprofits below both thresholds are exempt from filing.

What is the penalty for not filing T1044?

The penalty for late filing is $25 per day, up to a maximum of $2,500. Additional penalties may apply for repeated failures to file. The CRA may also charge interest on unpaid penalties and could potentially revoke an organization's tax-exempt status for continued non-compliance.

Can I file T1044 online?

Currently, Form T1044 must be filed by mail. Unlike Form T3010 for registered charities, there is no electronic filing option available for T1044 at this time. Check the CRA website for any updates to filing methods.

How long does it take the CRA to process T1044?

Processing times vary depending on the CRA's workload and the complexity of your return. Generally, you can expect processing to take 4 to 8 weeks after the CRA receives your return. If the CRA requires additional information, processing may take longer.

What documents do I need to file T1044?

You'll need your organization's complete financial statements for the fiscal year, including balance sheet and income statement, detailed asset listings and valuations, records of all investment income (interest, dividends, rentals), your organization's governing documents (if requested), and proof of nonprofit status.

Can a charity file both T3010 and T1044?

No. Registered charities file Form T3010 only. Organizations that are nonprofits but not registered charities may need to file T1044 if they meet the asset or income thresholds. An organization is either a registered charity or a nonprofit organization for CRA filing purposes, not both.