21 Sep NPO Reporting Changes: An Update on the Revised Draft Legislation

NPO Reporting Changes: An Update on the Revised Draft Legislation

A follow-up to our earlier article, “Federal Reporting Changes for NPOs: What You Need to Know.“

Overview

Last fall, we wrote about the federal government’s proposal to expand the annual reporting obligations of not-for-profit organizations (NPOs), first announced in the 2024 Fall Economic Statement and expanded on in the details released August 15, 2025. At that stage the proposals were directional, and a number of the specifics, including the revenue threshold that would pull more organizations into the filing net, were still open.

There have been meaningful developments since. On January 29, 2026, the Department of Finance released revised draft legislation that refines the original proposals in response to sector feedback. The government subsequently confirmed, in the Spring Economic Update tabled April 28, 2026, its intention to proceed with that draft, subject to the normal parliamentary process. The rules are not yet law, but the direction is now clear enough that affected organizations should begin preparing.

This article summarizes what has changed since our last update and what your organization should be doing now.

The timeline has moved to 2027

The most immediate change concerns timing. The expanded requirements are now proposed to apply to fiscal years beginning on or after January 1, 2027, a deferral from the earlier expectation of 2026. That gives boards and finance staff a full planning cycle to assess their obligations, but it is not a reason to set the issue aside. For an organization with a December year-end, the first affected period begins in just over a year, and the assessment work is best done before then.

A higher revenue threshold than first proposed

Under the current rules, an NPO must file a T1044 Non-Profit Organization Information Return within six months of its fiscal year-end if any of the following apply:

• It received, or was entitled to receive, taxable dividends, interest, rentals, or royalties totaling more than $10,000 in the period;
• Its total assets exceeded $200,000 at the end of the immediately preceding fiscal period (book value, per GAAP); or
• It was required to file a T1044 for a prior period.

The revised legislation adds a new trigger: an NPO will also have to file a T1044 if the total amounts it received during the fiscal period, including capital receipts, exceed $100,000. Notably, this $100,000 figure replaces the $50,000 threshold floated in the August 2025 proposal. The increase reflects submissions from the sector and will spare many mid-sized organizations the full T1044 obligation, though a large number of NPOs that have never filed will still be captured.

The existing T2 and trust-return obligations are unaffected by these proposals. Incorporated NPOs continue to file a T2 Corporate Income Tax Return (most claiming their income-tax exemption), and organizations providing dining, recreational, or sporting facilities to members may still have annual T3 Trust Tax and Information Return obligations.

A new short-form return for smaller organizations

The more significant structural change is the introduction of a short-form return for organizations that fall below all of the T1044 thresholds. An NPO that does not have to file a T1044 will nonetheless have to file the short-form return — unless one of two exceptions applies:

1. Its total receipts for the fiscal period are under $10,000; or
2. It is not considered an “organization.”

Both the T1044 and the short-form return will be due within six months of the fiscal year-end.

What counts as an “organization”?

This is the question many smaller clubs and associations will need to work through. Unincorporated entities and groups of individuals must be sufficiently organized to be treated as an “organization” for these purposes. The Explanatory Notes accompanying the draft legislation point to factors such as:

• A defined purpose;
• A constitution or bylaws;
• A defined organizational structure or hierarchy; and
• Defined governance roles, such as members, directors, and officers.

Loosely organized recreational or hobby groups may fall outside the definition and therefore outside the filing requirement, but this is a facts-based determination, and organizations near the line should not assume they are exempt without a careful look. For our incorporated society clients in BC, this test will rarely be in doubt: an incorporated entity governed under the Societies Act will generally meet it comfortably.

What the short-form return will require

The short-form return itself has not yet been released, but based on the draft it is expected to call for:

• A description of the organization’s activities, including whether any take place outside Canada;
• Total assets, liabilities, and amounts received for the period; and
• The names of the directors, officers, and trustees.

This is a lighter disclosure than the full T1044, consistent with the government’s stated goal of improving transparency across the sector without imposing a disproportionate burden on the smallest organizations.

Penalties for late filing

The penalty regime is unchanged and applies to both returns: $25 per day, with a minimum of $100 and a maximum of $2,500 for each failure to file. For an organization filing for the first time under the new rules, missing the deadline is an avoidable and needless cost.

What your organization should do now

While the legislation is still in draft, the practical steps are straightforward:

1. Estimate your total annual receipts, including capital receipts. This single number now largely determines whether you face a T1044, the short-form return, or nothing at all. Many organizations have never had to track it in this way.
2. Confirm your fiscal year-end and map the first affected period. Anything beginning on or after January 1, 2027 is in scope.
3. Assess whether you meet the “organization” test if you are unincorporated. Incorporated societies will almost always meet it.
4. Confirm who your current directors, officers, and trustees are, and that this information is current and accessible.
5. Build the filing into your year-end and governance calendar so it does not fall through the cracks during a change of treasurer, bookkeeper, or board.

How Clearline can help

Determining which return your organization must file and gathering the information to complete it accurately is exactly the kind of compliance work we handle for not-for-profits and charities across British Columbia. We can help you assess your filing obligation under the revised rules, integrate it into your existing year-end process, and ensure you remain onside as the legislation is finalized.
If you would like to discuss how these changes affect your organization, contact our team at reception@clearlinecpa.ca.

This article is a follow-up to our earlier piece on the federal NPO reporting proposals and reflects the draft legislation released January 29, 2026 and confirmed in the April 28, 2026 Spring Economic Update.
This article is provided for general information only and is based on draft legislative proposals that are subject to change. It is not, and should not be relied on as, accounting, tax, or legal advice. Please contact us to discuss your organization’s specific circumstances.