Many of our NPO and Charity clients are currently incorporated under Part II of the Canada Corporations Act ( i.e. federally incorporated). If you have not yet done so, you must apply for a certificate of continuance under the Canada Not-for-profit Corporations Act (NFP Act) by October 17, 2014. Corporations that do not make the transition by the deadline will be assumed to be inactive and will be dissolved. Furthermore, Charities will have their registered status revoked and potential revocation tax and penalties may apply under the Income Tax Act. As noted below, there is significant effort involved and there is less than a month until the looming deadline.The transition involves one (NPOs) or two (Charities) steps that are summarized below:
Application for a certificate of continuance (NPO and Charities)
To make the transition to the NFP Act, any federally incorporated NPO or Charity corporation must replace its letters patent, supplementary letters patent (if any), and by-laws with a certificate of continuance and new by-laws that comply with the NFP Act.
The certificate of continuance can be obtained by filing Form 4031, Articles of Continuance (transition), with Corporations Canada before the October 17, 2014 deadline.
However, prior to filing Form 4031, the CRA recommends that any registered charity planning to amend its existing purposes, should consult with the CRA’s Charities Directorate to ensure that its new purposes are charitable. Moreover, the NFP Act requires that the articles of continuance be approved by a special resolution of the corporation’s members. Therefore, immediate action is required to ensure these steps are completed before the October 17, 2014 deadline.
Note that any new by-laws approved by the members do not have to be filed with Form 4031 to obtain the certificate of continuance; however, they must be filed within 12 months of their approval.
For more information, refer to Corporations Canada’s Transition Guide for federal not-for-profit corporations.
Advising CRA’s Charities Directorate (Charities only) Once the above step have been completed and the certificate of continuance has been obtained, the charity must notify the Charities Directorate and provide them with the following documents:
- the certificate of continuance;
- Form 4031;
- the current by-laws (if amended) and
- a statement of current activities (if the purposes have changed and have not been previously reviewed by the Directorate)
For more information, see the CRA website, Transition to the Canada Not-for-profit Corporations Act (NFP Act). If you have any questions, please contact Damian Laflamme or Christa Casey.
Senior Tax Manager