Head Our bodies and Inside Divisions

A Canadian charity that intends to develop its operations in Canada can select to construction itself as a head physique with subordinate inside divisions working underneath its governing paperwork.

The Canada Income Company (“CRA”) has launched steerage on head our bodies and their inside divisions.

The CRA considers a head physique to be “a registered charity that has authority over its inside divisions, and is resident in Canada, and was both created or established in Canada.”

The CRA considers an inside division to be “a department, part, parish, congregation or different division of a registered charity that’s established in Canada and that receives donations by itself behalf.” An inside division:

• Operates as an extension of and underneath the authority of its head physique;
• Furthers the charitable function(s) of its head physique;
• Is just not a authorized entity and doesn’t have its personal governing paperwork, however operates underneath the governing doc of its head physique; and,
• Is registered as a charity individually with the CRA however stays in a subordinate place to its head physique.

Basic Advantages and Dangers or Obstacles of a Head Physique and Inside Division Construction:

Basic advantages embody:

• Head our bodies management and supply steerage on the governance issues of inside divisions, probably appearing as high quality management for the model.
• Head our bodies train a measure of management over the charitable actions of inside divisions.

Basic dangers or obstacles embody:

• Potential liabilities of head our bodies.
• Provincial registration necessities and charges for inside divisions.
• Every charity software of an inside division is topic to rejection (though the danger could be lowered as soon as an preliminary template is established for inside divisions).

Registration/Utility Course of:

For the registration functions of a head physique with the CRA, a corporation should:

1. Be registered as a charity underneath the Revenue Tax Act.
2. Have governing paperwork that present the charity has authority to do the next:
3. create and shut inside divisions;
4. personal the property of the inner division;
5. appoint and management the board of the inner division;
6. approve the funds of the inner division; and,
7. train a measure of management over the actions of the inner division.
8. Be permitted by the CRA.

For the registration functions of an inside division with the CRA:

1. A head physique should open a brand new pending RR account for an inside division.
   1. An inside division should submit an software for charitable registration with a letter of excellent standing from its head physique detailing the connection with the top physique and the governing paperwork of the top physique by such pending RR account.
   1. Be permitted by the CRA.

Necessities after registration

After registration:

• Head our bodies and inside divisions should file their personal Registered Charity Info Returns and monetary statements.
• Inside divisions should have the identical fiscal year-end as its head physique.
• Head our bodies should preserve its registered standing for its inside divisions to retain registered standing.
• All official donation receipts and Registered Charity Info Return types which might be filed should embody the registration quantity that the CRA points.
• Head our bodies should inform the Charities Directorate of any modifications to their mode of operations or authorized buildings (e.g., modifications in handle, administrators, authorized or working title, functions, actions, or governing paperwork).

For extra details about increasing the operations of a charity or head our bodies and inside divisions, our skilled Enterprise Legislation legal professionals can help you. To study extra about how we are able to help you, please contact us on-line or by phone at (416) 863-0125.

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