What are the basic elements of a charity’s books and records?
The books and records of a registered charity should
- reflect all of the activities of the charity
- be capable of verifying all charitable donations received
- be supported by source documents, like original receipts and invoices
- be in one of Canada’s two official languages (for more information see: Language)
Also note that privacy legislation relates to the use and the retention of records. Always ensure that records are kept for as long as they have to but no longer. For more information, consult the fact sheet Application of the Personal Information Protection and Electronic Documents Act to Charitable and Non-Profit Organizations.
What are our charity’s general responsibilities regarding our financial and other books and records?
A charity must keep adequate books and records
- in either English or French
- at a Canadian address it has on file with CRA
so that CRA can verify official donation receipts issued, as well as income and expenditures.
A charity must also keep information that proves that its activities continue to be charitable. This additional information will vary from charity to charity but could include, for example, copies of minutes of meetings, correspondence, publicity brochures, or advertisements.
The charity should retain its books and records as follows:
- duplicates of receipts must be retained for a minimum of two years from the end of the calendar year in which the donations were made
- books and records, together with the accounts and vouchers, containing the summaries of the year-to-year transactions of the charity, must be held for a minimum of six years from the end of the fiscal period to which they relate. When a charity loses or revokes its registration, the books and records must be retained for a minimum of two years after the date the registration is revoked
- as long as the charity remains registered and for two years after the registration is revoked:
- all records of any donations received by a charity that are subject to a direction by the donor that the property given be held by the charity for a period of not less than 10 years
- minutes of meetings of the executive
- minutes of meetings of the members
- all governing documents and by-laws
Books and records may be destroyed at an earlier time than outlined above if the Minister of National Revenue gives written permission for their disposal.
Refer to – Books and Records Length of Retention Chart
The Income Tax Act includes a long list of items in its definition of “books and records”. What types of books and records does our charity have to keep?
The usual books and records held and maintained by registered charities include
- governing documents
- constitution and by-laws
- annual reports
- board and staff meetings minutes
- bank statements
- expense accounts
- purchase vouchers
- investment agreements
- official donation receipts
- accountant’s working papers
- payroll records
- promotional materials
- fundraising materials
- financial statements
You’re right: it is a long list. Subsection 248(1) of the Income Tax Act defines a record as including an account, an agreement, a book, a chart or table, a diagram, a form, an image, an invoice, a letter, a map, a memorandum, a plan, a return, a statement, a telegram, a voucher, and any other thing containing information, whether in writing or in any other form. Notice that a book is defined as a record.
The Income Tax Act has a long list of books and records for a charity to keep. Does our organization have to keep all of the records noted in section 248(1)?
No, section 230 of the Act says that a charity must keep three kinds of books and records. These include information to enable determination of whether their grounds for revocation of its status under the Act (i.e., its compliance with the Act); duplicates of donation receipts; and such other information to allow verification of donations for which a deduction or tax credit is available. Within these three categories, it is up to you to decide which books and records to keep. As a general rule, it is better to keep more records than fewer.
The Income Tax Act defines a record as including an account, an agreement, a book, a chart or table, a diagram, a form, an image, an invoice, a letter, a map, a memorandum, a plan, a return, a statement, a telegram, a voucher, and any other thing containing information, whether in writing or in any other form. Notice that a book is defined as a record.
See the “Keeping Records” section of the Canada Revenue Agency’s website.
Our charity does all its work in a language other than French or English. Do we still need to keep our records in English or French?
Yes. Records must be in English or French.
Say your charity addresses concerns of a Spanish-speaking community. You may have kept your books and records in Spanish. In this case, you should talk to CRA about your circumstances. If you do not talk to them, you will still be required to have your books and records in English or French.
The CRA does recognize that for some very small charities translating from the original may become a significant burden. So the CRA is willing to consider such situations on a case-by-case basis.
Charities should be aware that under subsection 286(1) of the Excise Tax Act, persons, including charities, who carry on a business or are engaged in a commercial activity in Canada, who are required to file a GST/HST return, or persons who make an application for a rebate or refund, must keep adequate books and records in English or French in Canada.
Our previous treasurer has our books and records for the last fiscal period and has refused to return them. As a result, we cannot obtain the necessary information to file our T3010. What should we do?
Your charity remains responsible for maintaining adequate books and records and for meeting its filing requirements. If a legal means is necessary to obtain the documentation from the last treasurer, you may want to keep the Canada Revenue Agency informed of the steps you are taking.