The Department of Finance Canada published new Legislative Proposals Relating to the Income Tax Act and the Income Tax Regulations (the “January 2026 Proposals”), together with accompanying explanatory notes, on January 29, 2026. Among the January 2026 Proposals is draft legislation for reporting by non-profit organizations (“NPOs”) under paragraph 149(1)(l) and by agricultural organizations, boards of trade and chambers of commerce under paragraph 149(1)(e) of the Income Tax Act (“ITA”). As reported in the August 2025 Charity & NFP Law Update, draft legislation released on August 15, 2025 (“August 2025 Draft”) proposed to change information return filing requirements for these entities. Subsequently, as explained in Charity & NFP Law Bulletin No. 534, Budget 2025 confirmed the federal government’s intention to proceed with these measures following stakeholder consultation. The January 2026 Proposals now carry out that intention and reflect changes to the August draft legislation.
Currently, organizations under paragraphs 149(1)(l) and (e) are required to file a T1044 are those that meet any of the three requirements under paragraphs 149(12)(a) to (c) – namely (a) the total of all passive income in the fiscal period exceeds $10,000; (b) the total assets at the end of the preceding fiscal period exceeded $200,000; or (c) an information return was required to be filed for a preceding fiscal period.
The August 2025 Draft proposed to include a new paragraph 149(12)(d) to also require an organization to file a T1044 if the total of the receipts, including capital receipts, for the period exceed $50,000. New paragraph 149(13) in the August 2025 Draft provides that organizations that are not required to file T1044 under paragraph 149(12) (including those with annual receipts of $50,000 or less) would be required to file a short-form annual information return under new paragraph 149(13).
Under the January 2026 Proposals, the two-tier information return filing framework is proposed to be changed to a three-tier framework, by increasing the threshold in paragraph 149(12)(d) from $50,000 to $100,000, introducing a lower threshold of $10,000, and by including exceptions for filing the new short-form annual information return in new paragraph 149(14).
The three-tier framework works as follows:
Firstly, an organization that meets any of the requirements under paragraphs 149(12)(a) to (c) will continue to have to file an T1040 regardless of its total receipts.
Secondly, an organization that is not required to file T1040 as a result of paragraphs 149(12)(a) to (c), may fall within one of the following three categories:
- Organizations with total annual receipts that exceed $100,000 will be required to file a T1044.
- Organizations with total annual receipts over $10,000 but not more than $100,000 will be required to file the new short-form annual information return – unless it is not an “organization”, which is defined in paragraph 149(1)(I) as a club, society, or association that is not a charity and that is organized and operated solely for social welfare, civic improvement, pleasure or recreation, or any other purpose except profit.
- Organizations with total annual receipts of $10,000 or less will not be required to file either the T1044 or the new short-form annual information return.
The content of the short-form return has also been revised. While the August 2025 Draft required disclosure of the name and address of each director, officer or trustee, the January 2026 Proposals require only the name of each director, officer or trustee but not their address.
If passed, the amendments will apply to fiscal periods beginning on or after January 1, 2027.
The Department of Finance is consulting the public on the Legislative Proposals, and has requested that comments be sent via email to [email protected], with the title of the tax measure under consultation as the subject line. Comments must be submitted by February 27, 2026.