The Ontario Not-for-Profit Corporations Act (ONCA), proclaimed on October 19, 2021, introduces significant changes affecting nonprofits in Ontario:

Overview of ONCA

1) Effective Date: The ONCA became effective on October 19, 2021.

2) Key Changes: These include requirements for audits, members’ rights, the number of directors, and the introduction of the Ontario Business Registry (OBR) for online filings.

3) Transition Period: Existing Ontario not-for-profit corporations, which were previously governed under the Ontario Corporations Act (OCA), have been given a three-year transition period, starting from October 19, 2021, to align their governing documents with the new requirements of the ONCA. Ontario Non-profits are expected to make any necessary changes to their articles and bylaws to comply with the new regulation by October 18, 2024.

Public Benefit Corporations (PBCs)

1) Definition: A nonprofit is a PBC if it’s a charity or received more than $10,000 in the previous financial year from public sources, including government grants or donations from non-members.

2) Special Rules for PBCs: PBCs have specific rules regarding financial review and reporting, as well as restrictions on the distribution of assets upon dissolution. Charitable PBCs cannot have directors who are employees, except under special circumstances. Non-charitable PBCs are limited to one-third of their directors being employees or ex-officio directors.

Financial Requirements

1) Access to Financial Statements: Members can request and must be provided access to the nonprofit’s financial statements and auditor’s report.

2) Audit Requirements: The need for an audit depends on whether the organization is a PBC and its annual revenue. For instance, PBCs with annual revenue over $500,000 must have an audit, while those with lesser revenue can opt for a review engagement or, in some cases, pass a resolution to forgo both. Non-PBCs have more flexibility in opting out of audits and review engagements.

3) Extraordinary Resolutions: Decisions about audits can be made through an extraordinary resolution, which requires either an 80% favourable vote at the annual meeting or a unanimous written agreement from all members.

The review engagement process

From Rules for not-for-profit and charitable corporations (click here)

ONCA introduces a new process for reviewing a corporation’s financial records called the “review engagement.” This new process is less extensive than an audit and, as a result, generally less expensive.

Whether or not your corporation can use a review engagement instead of an audit or waive an audit and review engagement will depend on its revenue per financial year and whether or not it is a public benefit corporation. The following chart summarizes what type of financial review your corporation may need.

Type Of Corporation	Amount of Revenue Per Financial Year	Type of Financial Review
Public Benefit Corporation	$100,000 or less	Waive*
Public Benefit Corporation	More than $100,000, but less than $500,000	Review engagement*
Public Benefit Corporation	$500,000 or more	Audit
Non-Public Benefit Corporation	$500,000 or less	Waive*
Non-Public Benefit Corporation	More than $500,000	Review engagement*

*Approval to waive an audit or to waive both an audit and review engagement requires an extraordinary resolution, which is approval from at least 80 per cent of the votes cast at a special members’ meeting where there are enough members to take a vote or if all voting members consent in writing.

We emphasize the importance of reviewing your current structures and financial reporting practices to ensure compliance with the new regulations. The deadline is October 18, 2024, for updating your governing documents as per ONCA’s requirements. For details or more resources to help learn more about ONCA please go to https://www.ontario.ca/page/rules-not-profit-and-charitable-corporations.

The Canada Revenue Agency (CRA) understands that there are unique challenges for affected owners in the first year of the Underused Housing Tax Act (UHTA) administration.

To provide more time for affected owners to take necessary actions to comply, the Minister of National Revenue is providing transitional relief to affected owners. The application of penalties and interest under the UHTA for the 2022 calendar year will be waived for any late-filed underused housing tax (UHT) return and for any late-paid UHT payable, provided the return is filed or the UHT is paid by October 31, 2023.

This transitional relief means that although the deadline for filing the UHT return and paying the UHT payable is still April 30, 2023, no penalties or interest will be applied for UHT returns and payments that the CRA receives before November 1, 2023.

UHT Filing Help

A gift or award that you give an employee is a taxable benefit from employment, whether it is cash, near-cash, or non-cash. However, CRA has an administrative policy that exempts non-cash gifts and awards in some cases.

At this Service Ontario link, you will find guidance on how to start and manage your not-for-profit or charitable organization. You can get information about the laws and regulations that apply to not-for-profits and charities and find out about available funding opportunities.

Use this great link to find:

• Personal and corporate tax rates in Canada
• CPP rates
• EI rates
• Canada Revenue Agency prescribed rates
• Foreign Currency exchange rates
• Automobile Allowance mileage rates
• GST/HST rates in Canada
• and more!

In a review engagement, the objective for the independent public accountant is to review your financial statements to determine whether they are plausible by following the Accounting Standards for Not For Profit Organizations (ASNFPO). Review engagements are commonly requested by members, foundations or government. Reviews provide limited assurance that your financial information conforms to Canadian Generally Accepted Accounting Principles (GAAP).

In an audit engagement, the objective for an independent professional public accountant is to express an opinion on the fairness of your financial statements in accordance with Accounting Standards for Not For Profit Organizations (ASNFPO). An auditor will test and gather evidence in order to obtain reasonable assurance that the financial statements are free of material misstatement. Audited financial statements are widely used for your members, bank, donors and government.

Most NPOs do not need to register for GST/HST but if they having taxable supplies in excess of $50,000 during the fiscal year and in excess of $250,000 in revenue from all sources then the NPO may be required to register and collect GST/HST. Be careful that you are dealing with taxable supplies and not exempt.

If an NPO is not a registered charity then a corporate tax return needs to be completed annually even though the corporation is exempt from tax. We can help complete the tax return while protecting your tax exempt status.

If you are a charity, you are eligible to file a GST/HST Public Service Bodies rebate every 6 months in order to recover the Federal and Provincial portions of the GST/HST the charity paid on expenditures. NPOs are eligible to recover GST/HST as well if greater than 40% of their income is received from government sources (or 40% of their income on average over the past three years).

Many organizations fail to record GST/HST properly in their recordkeeping. Please seek advice on recovering GST/HST on your capital expenditures, mileage reimbursements and other areas commonly overlooked.