It may not be glamourous or exciting work, but when it comes time to wind up and dissolve a charity or not-for-profit corporation, it is worth doing right. Regardless of the reason for discontinuing the work of an organization, there are a number of important steps that leaders of the organization should undertake to avoid incurring penalties, ensure that the assets are properly disposed of, and minimize any risk for the directors, officers, and employees.
An incorporated not-for-profit must get consent from the relevant corporate department – either Corporations Canada for a federally incorporated not-for-profit, or the Ministry of Government and Consumer Services for an Ontario not-for-profit. A registered charity must also get consent from Canada Revenue Agency (CRA). Additionally, a registered charity incorporated in Ontario will need to obtain the permission of the Ontario Public Guardian and Trustee before the corporate dissolution will be granted.
Below is a non-exhaustive list of considerations when dissolving a not-for-profit and when giving up charitable registration in Ontario:
- File any outstanding corporate returns
- Ensure all T3010s are filed with CRA
- Review and update your minute book and financial records, and pass the appropriate resolutions authorizing the dissolution of the corporation and the revocation of charitable registration
- Ensure that any employees are given notice of termination in accordance with their employment contracts and the Employment Standard Act (Ontario)
- Terminate any service contracts or other long-term commitments
- Consider the appropriate plan for the disposition of any assets of the corporation
- Obtain the necessary consent and then file Articles of Dissolution with the relevant government ministry
- Notify the CRA of the charity’s intention to voluntarily give up its charitable registration
- Complete the final CRA return, the T2046
- Obtain tail insurance coverage
- Maintain the organization’s tax and corporate records for at least the required minimum period
If you need any assistance with dissolving your not-for-profit corporation or voluntarily giving up your charitable registration, we would be happy to help.