Alright. Everyone get ready because we are diving deep today. It might sound a little boring at first, but stick with me. We're gonna be talking about the t thirty ten return for Canadian charities, especially for those of you getting ready to file. So we're gonna be going over how to file it properly, how to avoid common mistakes, and really present your organization in the best way.
David:We're gonna break it all down. And to help us with that, I've got someone here with me today. You know how I always say taxes are like a puzzle, but instead of a pretty picture at the end, you get peace of mind.
Sarah:Yeah. That's 1 way to think about it.
David:Well, to help us navigate this t thirty ten maze, I've got an expert puzzle solver with me.
Sarah:Happy to be here.
David:What do you say we get started with some of the basics, things that can trip people up right away?
Sarah:Yeah. For sure. I think 1 of the most important things to remember is that the return needs to be complete. You need every form, every attachment, your financial statements. Everything needs to be there.
Sarah:It's not like ordering a pizza where you can just say hold the mushrooms.
David:So no picking and choosing what we want to include. And speaking of pizza, I'm guessing there's a pretty strict delivery time for this return.
Sarah:Yeah. You're right about that. There's a strict deadline of six months from the end of your fiscal year. So if your fiscal year ends on Dec. 31, you wanna mark June 30 on your calendar and probably highlight it a couple of times.
Sarah:Missing this deadline can have some bad consequences, so no procrastinating allowed.
David:June 30. Got it. No late night pizza orders for this 1. Yeah. Now those financial statements you mentioned, those need to perfectly align with the fiscal year end.
David:Right?
Sarah:That's right. Any discrepancies between the 2 can really confuse things. The CRA needs a clear and accurate picture of your finances, so consistency is really key.
David:Consistency is king. Alright. I'm writing that down. Now here's something that confused me when I was reading through all the material. Let's say a charity is inactive for the year.
David:Do they still need to file? Seems like a lot of work for an organization that's essentially on pause.
Sarah:It's a common question, and the answer might surprise you. Even inactive charities have to file their return. You can think of it like checking in with the CRA, letting them know you're still around even if you weren't operating this year. It's really about keeping your charity status current.
David:So it's like sending the CRA a postcard Mhmm. To say, hey. We're still here. We're just taking a little break. Now before we get too comfortable with those postcards, I wanna go over another potential problem area, section c 2 of the return.
David:It's all about describing your activities. But it seems like there's a difference between describing charitable activities Yeah. And fundraising activities.
Sarah:Yeah. That's a very important difference. You need to be very specific in section c 2. Like, for example, if your charity holds a gala. To raise money for a new community center, that gala is considered a fundraising activity.
David:So the gala is like a trailer for the main event, which is actually building the community center.
Sarah:Exactly. The gala goes under fundraising.
David:And the community center project goes where?
Sarah:That would go in the charitable activity section. You wanna describe the impact it will have?
David:Okay. So separate the showmanship from the substance. Yeah. Got it. Now this next 1 might sound a little obvious, but we've gotta talk about signatures and information.
Sarah:Of course.
David:What do we need to know about signatures? And is it enough to just make sure all the information is filled out correctly?
Sarah:Well, while a fancy signature might be nice, what really matters is accuracy and completeness. You need a director or trustee's signature in section e. And when it comes to the information you really wanna pay attention to, form t twelve three d 5. That's where they ask for details about all your directors, trustees, and officials, things like their date of birth, arm's length status.
David:Hold on. Arm's length status. What exactly does that mean?
Sarah:It's not as complicated as it sounds. Arm's length basically means there's no close relationship between the parties involved. Like, if a director was your brother-in-law, that wouldn't be considered arm's length.
David:So it's all about transparency and avoiding conflicts of interest. Okay. That makes sense. So back to form t twelve three five. We need those dates of birth, the arm's length status, and, wait for it, postal codes.
David:Seriously.
Sarah:I know it might seem like a small detail, but trust me, the CRA takes those things very seriously. Missing even 1 postal code can hold things up. And while we're talking about details, don't forget about form t one two three six. You need to include the registration numbers for all your qualified dunny.
David:Yeah. So it sounds like accuracy is really, really important here. Dot your i's and cross your t's and make sure you have all the postal codes. Now I know that most people file electronically these days, but what if, for whatever reason, we need to mail in the documents, do we just address it to CRA headquarters?
Sarah:It's a little more specific than that. So if you need to mail in your return, make sure you send it to this address, Charities Directorate, Canada Revenue Agency. One zero five two seven five Pope Road, Summerside, PE c one n six e eight.
David:So not quite CRA headquarters. More like CRA's seaside retreat, judging by that address. Okay. I've got it. Now as much as I'd love to hang out in Summerside, let's get back to this t thirty ten.
David:I'm guessing there are even more sections and schedules we haven't talked about yet.
Sarah:Yeah. There's still lots to cover. And 1 of the big things to understand is the difference between section d and schedule 6.
David:Okay. Now this sounds interesting. So how do we know which 1 applies to our charity?
Sarah:It really depends on your specific organization. Section d is the standard path for most charities. But if your charity is a bit more complex, you might find yourself in schedule 6 territory.
David:Schedule 6 territory.
Sarah:Yeah. Think of it like the VIP section of the t thirty ten.
David:Oh, VIP section. I like the sound of that. So how does our charity get this VIP treatment?
Sarah:There are a few factors. It depends on your revenue, your your property holdings, and whether you have permission to accumulate funds. If any of those exceed a certain limit, then you're in schedule 6.
David:So it's like leveling up in the charity world. And I'm guessing this leveling up comes with a few extra responsibilities Oh. When it comes to filing.
Sarah:You got it. Special 6 needs more detailed reporting.
David:Okay. So before we get to the VIP section, I wanna make sure we haven't missed anything crucial in section d. What do we need to look out for there?
Sarah:The main thing is to make sure your financial data is accurate, especially when it comes to lines 4500 to 4650. Those lines deal with your charity's revenue, and it's how the CRA checks your financial health and that you're compliant.
David:So those lines are like the vital signs of RT thirty ten.
Sarah:Got it. Well, before we move on to the VIP section or maybe even grab a snack, I wanna hear from you, the listener. What has stood out to you so far about the t thirty ten filing process? Head over to our social media and let us know. We'd love to hear your thoughts and experiences.
Sarah:And who knows? Maybe your question will even inspire new deep dive in the future. But for now, let's take a little break. And when we come back, we'll tackle schedule 6 together.
David:Alright. So are you ready for that VIP schedule 6?
Sarah:Absolutely. Let's get into it.
David:Okay. Well, as we talked about before, schedule 6 is for charities That meets certain criteria. Higher revenue, significant property holdings, or permission to accumulate funds.
Sarah:So if our charity is doing really well and maybe has some valuable property, that means we're in the schedule 6 club. Exactly. And with that VIP status comes more responsibility. You need to give more detailed financial information. So you'll need to pay close attention to lines 4500, 40 40 5 10 to 4580, 40 6 to 4650, and 4800 to 4920.
David:It sounds like the CRA wants a pretty thorough look at those finances.
Sarah:Yeah. They wanna make sure everything is transparent and accountable, especially with organizations that have more resources.
David:Transparency and accountability, those seem to be the key themes here. Now speaking of transparency, let's talk about donations, specifically those donations that aren't just money. What about those gifts in kind?
Sarah:Oh, yeah. Gifts in kind or noncash donations are a great way for people to support charities. Things like donating clothes to a thrift store or furniture to a nonprofit, but figuring out how to value them for the t thirty ten can be tricky. Yeah.
David:It's like trying to compare apples and oranges Mhmm. Or maybe apples in office chairs in this case. How do we figure out how much those donations are worth?
Sarah:That's where the CRA guidelines come in. You have to follow them really carefully. For example, you can't just use the market value of a new item if you donate that old couch you've been meaning to get rid of. You can't say it's worth the same amount you paid for it ten years ago.
David:No inflated couch values allowed. So we have to use fair market value and consider the condition of the item. Now what about people who donate their time and skills? Do volunteer hours have any value to the CRA?
Sarah:That's a good question. While volunteers are incredibly valuable to charities, their time doesn't actually have a monetary value for the t thirty ten.
David:So we don't include volunteer hours as a financial contribution.
Sarah:That's right. But you should definitely highlight the impact of your volunteers in other parts of the return.
David:Okay. That makes sense. So we've got gifts in kind volunteer hours. Are there any other types of donations we should be aware of?
Sarah:Yeah. Let's talk about restricted donations. These are donations that have specific instructions instructions about how the money can be used. Like, if someone donated money to fund a program.
David:So the donation comes with a bit of a mission statement.
Sarah:Exactly. And when you're reporting on those donations, you need to be transparent. You need to track those donations separately and show that they were used according to the donor's instructions.
David:So we need to show that we're using the money for its intended purpose. Now are there any common mistakes charities make when it comes to reporting donations?
Sarah:1 of the biggest ones is not giving out official donation receipts. Every eligible donation needs a receipt no matter the amount.
David:So even if someone puts $5 in a donation box at an event?
Sarah:Technically, yes. But for those small donations, you can use a simpler receipt. But for larger donations, you need to include more information, like the donor's name and address and the date of the donation.
David:Okay. The different levels of detail depending on the amount. What other mistakes should we watch out for?
Sarah:Another 1 is reporting the wrong value for donated goods or services. We talked about fair market value before, and this is where it's really important to get it right. Overvaluing donations can have serious consequences like audits and penalties.
David:Okay. So better to be safe and follow those CRA guidelines. Now we've talked a lot about the technical parts of filing the t thirty ten, but I'm also wondering about how this return connects to a charity's impact.
Sarah:That's a good point. The t thirty ten isn't just about checking boxes and following the rules. It's a chance to show the great work your your organization is doing and how you're fulfilling your mission.
David:So it's like the charity's annual report card, not just to the CRA, but to the public as well.
Sarah:Exactly. It tells the story of your activities, your finances, and your impact.
David:That makes it sound a lot less scary. But how do we make sure our t thirty ten is more than just numbers? How do we turn it into a story?
Sarah:That's where using clear and simple language comes in. Use descriptions that highlight the impact of your programs. Share your successes and challenges. Like, if your animal shelter found homes for a record number of animals last year, that's something you can celebrate in your t thirty ten.
David:So we need to share those inspiring stories.
Sarah:Exactly. Those stories bring your work to life. And remember, this information is public, so it's a great way to connect with potential donors, volunteers, and supporters.
David:So we've covered gifts in kind, restricted donations, mistakes to avoid, and the importance of storytelling. What other advice do you have for us?
Sarah:1 thing that I always recommend is to keep really good records, and I don't just mean financial records.
David:So what other records should we be keeping?
Sarah:Things like your board meeting minutes program, reports volunteer logs, anything that documents your activities and decisions.
David:And why is that so important?
Sarah:It gives gives you a clear audit trail. It shows that you're being transparent and accountable. Mhmm. So if the CRA has any questions, you'll have the documents to answer them.
David:It's like having a superpower, the power of organization. But even with the best organization, mistakes can happen. So what happens if we make a mistake on our t thirty ten after we've already filed it?
Sarah:Don't worry. The CRA has a way to fix mistakes. You need to file a t twelve forty three, which is a request to change a charity information return.
David:So there's a way to fix things if we need to, but I guess it's still best to try to avoid mistakes in the first place.
Sarah:Exactly. Double checking everything before you file can save a lot of trouble later.
David:So let's talk about some things we can do to prevent those mistakes.
Sarah:1 of the most important things is to stay up to date on CRA guidelines. Those guidelines can change, so you need to keep track of them.
David:Okay. But how do we stay up to date without reading tons of documents?
Sarah:The CRA website has a lot of information for charities, guides, FAQs, even webinars. So that's a great place to find everything you need.
David:So we should bookmark that website and check it often.
Sarah:Exactly. They often add new information and clarifications.
David:Okay. So knowledge is power. What else can we do to be proactive?
Sarah:I also suggest getting help from a charity law expert, especially if you have complex questions.
David:So if we're not sure, it's always best to call in a professional.
Sarah:Exactly. They can help you understand the rules and make sure you're doing everything right.
David:That peace of mind is really valuable. Now before we get to the last part of our deep dive, I wanna thank all our amazing listeners. You're the ones out there doing the hard work and making a difference.
Sarah:You're right. The work you do is unimportant.
David:And to show our appreciation, we wanna hear from you. What surprised you about the t thirty ten? Or maybe you have a question we haven't answered yet. Let us know on social media.
Sarah:We always love to hear your thoughts and experiences.
David:Alright, everyone. Grab your favorite drink and a snack. We'll be back in a minute to talk about audits. Alright. We're back and ready to talk about something that nobody really wants to talk about, but that's what we do here right now.
Sarah:Okay.
David:Today, we're talking about audits.
Sarah:Everyone take a deep breath. It's not as scary as you think.
David:Easy for you to say. But okay. Good. Seriously, let's break it down. What actually happens during a CRA audit of a charity?
Sarah:Well, first of all, it's not like someone actually shows up at your door. But, basically, an audit is a review of all your records and activities. They wanna make sure you're doing everything by the book, that you're managing your finances properly, and that you're actually running the programs you said you would.
David:So kind of like a financial and operational health check.
Sarah:Yeah. You could say that. They'll look at everything you're governing, documents, your financials, your donation records, your program report.
David:Wow. That sounds pretty thorough. So what makes them decide to audit a charity in the first place? Is it random, or are there certain things that can trigger it?
Sarah:There are definitely some things that can increase your chances of getting audited, like incomplete or inaccurate filings. Remember all that talk about accuracy and attention to detail? This is where it really matters.
David:So if our t thirty ten looks like it was filled out by a 5 year old, that's a bad sign. Well, it's
Sarah:not quite that simple, but you get the idea. Any inconsistencies between your reports and what you're actually doing can be a problem. Transparency and consistency are so important.
David:Okay. So no funny business allowed. What about public complaints? Can those lead to an audit?
Sarah:Absolutely. Especially if they're about serious issues like misuse of funds, it all comes down to having a good reputation.
David:Okay. So integrity is important too. So let's say the worst happens and the CRA decides to audit our charity. What should we do?
Sarah:The most important thing is to stay calm. I know it's easier said than done, but try not to panic. You need to cooperate CRA. Provide all the documents they ask for. And this is where those records we talked about are so important.
David:So it's like studying for a test. If you're prepared, you don't have to be scared.
Sarah:Exactly. And speaking of preparation, would it be a good idea to talk to a lawyer?
David:I was just thinking that. It seems like it would be smart to have some legal advice.
Sarah:It can definitely be helpful, especially if things are complicated. A lawyer can help you understand your rights and communicate with the CRA.
David:So it's like having a guide to help us through the process.
Sarah:That's a good way to put it. And remember, even if the audit finds some problems, it's a chance to learn and improve.
David:Yeah. It's not the end of the world if we make a mistake. Okay. It's about figuring out how to do better next time.
Sarah:Exactly.
David:Well, we've covered a lot of information today. Everything from the details of filing the t thirty ten to the big picture stuff like transparency and audits.
Sarah:It's been quite the deep dive.
David:Hopefully, you're feeling a little more confident about filing your t thirty ten.
Sarah:And don't forget, there are resources out there to help you.
David:That's right. And most importantly, remember the incredible work you do as charities. You're making a real difference in the world.
Sarah:I agree completely. Keep up the great work.
David:And to our listeners, thank you so much for joining us. We hope you found this deep dive helpful and informative. Remember, knowledge is power, and we're all in this together.
Sarah:Happy filing, everyone.
David:And happy impact making. We'll see you on our next deep dive.