How to Start a Federal Not-for-Profit Corporation in Canada (CNCA)

A Canada not-for-profit corporation is incorporated under the federal Canada Not-for-profit Corporations Act (CNCA) through Corporations Canada's Online Filing Centre. Filing costs $200 and takes about one business day. You need articles of incorporation, a registered office address and at least one director. Soliciting corporations need three. The annual return costs $12.

This guide explains how to start a non-profit in Canada at the federal level, how soliciting status works, what goes into articles and by-laws, how a federal corporation compares with an Ontario one, and how a not-for-profit differs from a registered charity.

What is a Canada not-for-profit corporation?

It is a corporation without share capital, created under the CNCA and regulated by Corporations Canada. It has members instead of shareholders. It is run by a board of directors and exists separately from the people involved. Like any corporation, it can sign contracts, own property and open bank accounts in its own name. Its members and directors are generally not personally liable for its debts.

A not-for-profit can earn a surplus. What it cannot do is pay that surplus to members as profit. Money stays in the organization and goes towards its purposes.

How do you start a non-profit in Canada at the federal level?

1. Choose a name. Corporations Canada now includes the name search in online incorporation. You don't need to order a separate Nuans report for a new federal not-for-profit.
2. Write your purposes. The articles must include a statement of the corporation's purpose. If you may later apply for charity status, write purposes that are exclusively charitable from the start.
3. Decide on member classes and the number of directors. The articles set out the classes of members and either a fixed number of directors or a minimum and maximum.
4. Add a statement on property distribution. The articles must say what happens to remaining property on liquidation. A soliciting corporation must direct it to a "qualified donee" under the Income Tax Act.
5. File online. Submit the Articles of Incorporation (Form 4001), along with the initial registered office address and first board of directors (Form 4002), through the Online Filing Centre. The government fee is $200, and the standard processing time is one business day.
6. Adopt by-laws. The directors make the by-laws, and the members confirm them at the next meeting of members. Then file them with Corporations Canada (free online).
7. Hold the first members' meeting. The first annual meeting must be held within 18 months of incorporation.
8. Register with the CRA and your province. A federal corporation that carries on activities in a province usually also registers there as an extra-provincial corporation.

Our not-for-profit incorporation service handles the articles, filing and organizational documents for you.

What is the difference between a soliciting and a non-soliciting corporation?

The CNCA divides not-for-profit corporations into two groups. A corporation becomes soliciting once it receives more than $10,000 in a financial year from public sources. Public sources are donations from non-members, government grants and funds from other soliciting corporations.

Soliciting status does not start right away. It applies from the next annual meeting of members. It lasts until the third annual meeting after that date. A corporation can apply to Corporations Canada to be treated as non-soliciting. The Director may agree if the public interest would not be harmed.

Below these thresholds, members can choose a lighter review engagement instead of an audit. The smallest corporations can sometimes waive the public accountant altogether. Revenue changes from year to year, so check sections 179 to 189 of the Act each year. A rise in revenue can mean a full audit is required.

Who can be a director?

A director must be an individual, at least 18 years old, not declared incapable by a court and not bankrupt. Those are the CNCA's disqualifications. Canadian residency is not among them. A corporation that later applies for charity status should get advice, because the CRA looks closely at who controls a charity.

What goes into articles and by-laws?

Articles are the public document filed to create the corporation. They set out its name, the province of its registered office, its member classes, its number of directors, its purposes, any restrictions on activities and its property-distribution clause. You need articles of amendment ($200 online) to change any of these later.

By-laws are the internal rulebook. They usually cover membership conditions, how meetings are called, voting, how directors are elected and who signs documents. The CNCA doesn't require by-laws to be filed by a fixed date after incorporation. Once members confirm a by-law, though, it must be sent to Corporations Canada within 12 months. Corporations Canada publishes a model by-law that many small organizations adapt.

What annual filings does a federal not-for-profit have?

• Annual return: due within 60 days after the anniversary of incorporation. The fee is $12 online. Corporations Canada can dissolve corporations that stop filing.
• Annual meeting: within 15 months of the previous one and within 6 months after the financial year-end.
• Financial statements: placed before members at every annual meeting. Soliciting corporations also file them with Corporations Canada.
• Tax returns: covered in the charity section below.

The process mirrors the one for business corporations, described in our guide to the federal annual return.

Federal CNCA or Ontario ONCA: which should you choose?

Organizations that will only operate in Ontario often incorporate under Ontario's Not-for-Profit Corporations Act, 2010 (ONCA). National or multi-province organizations usually choose the CNCA.

For the Ontario route, see how to start a non-profit in Ontario.

Non-profit vs charity in Canada: what is the difference?

Incorporation and charity status are separate. Incorporating creates the legal entity. Charity status is a tax status granted by the Canada Revenue Agency (CRA). Many not-for-profit corporations never become charities.

An NPO must file Form T1044 if, in the fiscal period, it earned more than $10,000 in dividends, interest, rentals and royalties. The same applies if it had more than $200,000 in assets at the end of the previous period, or had to file one before. See our guide to the T2 corporate tax return for the T2 side. Tax treatment depends on your facts, so speak to an accountant before you rely on any exemption.

How do you register a charity in Canada?

1. Incorporate (federally or provincially) with purposes that fall under the four heads of charity: relief of poverty, advancement of education, advancement of religion, or other purposes that benefit the community.
2. Get a business number and a charity (RR) program account.
3. Apply online through your CRA account. Older guides mention paper Form T2050. The CRA now directs applicants to its online application instead.
4. Upload your governing documents (articles and by-laws), a detailed description of your activities, your financial statements or a budget, and information about your directors.

The CRA reviews both purposes and activities. Vague purposes are a common reason for delays, so draft them carefully when you incorporate.