Changes on the Horizon of Not-for-Profit Tax Landscape

Non-profit organizations, or NPOs, are always jumping through hoops to satisfy donors, clients, and the Government of Canada – and it looks like that isn’t going to change any time soon. NPOs will have three new things to consider while wrapping up their 2010 finances this fall.

• HST and Place of Supply

By now, your organization has had some time to get used to the HST in B.C. and Ontario, but if you haven’t placed or received any orders from out of province, you may not be familiar with the new place of supply rules. While before tax was placed based on where the contract was negotiated (usually the location of the NPO’s head office), with the new rules the place of supply is considered to be the billing address of the member.
If you do business mostly in one province, not much will change, but you’re working across Canada, you have to be careful to charge the correct tax, and be prepared for taxed to vary.

• Incorporation

If your NPO is currently incorporated under the Canada Corporations Act, draft legislation may mean you will have apply for corporate status under the proposed Canada Not-for-Profit Corporations Act. If this legislation comes into play, it may mean your financial statements will have to be audited, even if that is not a requirement currently.

• New Accounting Standards

New standards have been proposed for NPOs, and if they are adopted they will apply to all fiscal years beginning on or after Jan. 1, 2012. These standards will require private sector NPOs to adopt IFRS or new NPO standards, while government controlled NPOs will be forced to adopt public sector standards.

Working for NPOs means there is never a slow moment, so it might be a good idea to speak with your accountant, who can get you up to speed on these issues quickly. If you’re currently in the market for an accountant, contact one of the professionals at Welch LLP to set up an appointment.