The short answer: a not-for-profit’s books have to do more than show a surplus or a deficit. They have to show that restricted money was spent as intended, produce statements the board and funders trust, and support the right CRA filings, which are different for registered charities and for other non-profit organizations.
1. Know which kind of organization you are
Your filing obligations depend on it:
- Registered charities can issue official donation receipts. They must file the T3010 Registered Charity Information Return within six months of their fiscal year-end, and CRA can revoke registration for failing to file.
- Non-profit organizations (NPOs) that aren’t charities may have to file the T1044 NPO Information Return. It’s required if the organization received more than $10,000 in taxable dividends, interest, rentals or royalties in the year, had total assets over $200,000 at the end of the previous fiscal period, or had to file one before. Once you’ve filed one, you file every year after.
- Incorporated NPOs must also file a T2 corporation income tax return every year, even when no tax is owing. Registered charities don’t file a T2.
2. Track restricted money separately
Grants and donations often come with conditions: a specific program, a time period, a capital project. Track each restricted source separately, using classes or tracking categories in QuickBooks Online or Xero, so you can show at any time how much was received, how much was spent and what’s left. Under the Canadian standards for not-for-profits, restricted contributions are accounted for using either the deferral method or the restricted fund method; choose one and apply it consistently.
3. Produce the statements your board and funders expect
Most Canadian not-for-profits report under Accounting Standards for Not-for-Profit Organizations (ASNPO). A full set includes:
- a statement of financial position (the balance sheet)
- a statement of operations (revenue and expenses)
- a statement of changes in net assets
- a statement of cash flows
- notes, including how restricted contributions are handled
Check your bylaws, funding agreements and incorporating legislation for whether you need an audit or a review engagement. Those must be done by a licensed public accountant, so budget for them early. Our guide to financial statements covers the basics.
4. Reconcile monthly and report to the board
Reconcile every bank account monthly, not just before the annual meeting. A simple monthly or quarterly package keeps the board informed:
- revenue and expenses compared with budget
- cash on hand and upcoming commitments
- restricted fund balances, and what’s been spent from each
5. Don’t forget payroll and GST/HST
- With employees come payroll remittances, T4 slips and year-end reconciliations, the same as any employer.
- Many charity and non-profit activities are exempt from GST/HST, but not all. Check whether you need to register.
- Charities, and non-profits that get at least 40% of their revenue from government funding, may be able to claim back part of the GST/HST they pay through the public service bodies’ rebate.
6. Keep your records, and plan for handovers
CRA generally requires records to be kept for six years from the end of the last tax year they relate to, and some documents, such as governing documents and minutes, must be kept much longer. Keep them somewhere the next treasurer can find them. Volunteer treasurers change, and missing records are a common reason a non-profit falls behind.
When outside help makes sense
Many small organizations rely on a volunteer treasurer. An outside bookkeeper gives you continuity when board members change, and a clean handoff for year-end. If filings have already been missed, a catch-up brings every return current in order. See how we work with not-for-profits.
Sources: CRA, Income Tax Guide to the NPO Information Return (T4117); CRA, When to file the T3010; CRA, T2 Corporation Income Tax Guide, chapter 1; CRA, GST/HST public service bodies’ rebate (RC4034). First published January 2023 and fully revised in September 2026. General information, not advice for your specific situation.
