By Terrance S. Carter and Adriel N. Clayton

Enhanced Reporting Requirements for Non-Profit Organizations

As discussed in Charity & NFP Law Bulletin No. 530 in December 2024, the 2024 Fall Economic Statement proposed amendments to the Income Tax Act (ITA) regarding annual reporting requirements for non-profit organizations (NPOs) under paragraph 149(1)(l) of the ITA. The Federal Government released draft legislation on August 13, 2025 regarding these amendments. Currently, subsection 149(12) of the ITA requires NPOs to file an annual T1044 return if: (a) the total of all passive income in the fiscal period exceeds $10,000; (b) the NPO’s 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.

In addition to these current threshold requirements, the proposed amendments would add a new paragraph 149(12)(d) to also require NPOs to file a T1044 if “the total of all amounts each of which is an amount received in the period by the person, including as or on account of capital, exceeds $500,000”.

As well, a new proposed subsection 149(13) would require small NPOs with gross revenue under the $500,000 threshold to file a new annual short-form information return outlining basic information about the organization, including “(a) a description of the person's activities, including whether it conducts activities outside Canada; (b) the total assets, total liabilities and total amounts received by the person for the period; and (c) the name and address of each director, officer or trustee of the person”.

These amendments are intended to enhance reporting requirements with the aim of improving transparency in the non-profit sector. The draft legislation, if passed, will apply to fiscal periods that begin on or after January 1, 2026.

PEI Introduces New Trustee Act

A new Trustee Act (the “New Act”) came into force in Prince Edward Island on August 2^nd, 2025, which repeals the previous Trustee Act, the Perpetuities Act, as well as the Variation of Trustees Act. The New Act applies retroactively to the extent necessary, with a few specific provisions being inapplicable to trusts created prior to it coming into force. The New Act makes a few substantial changes to the previous Trustee Act and addresses some of the shortfalls of the previous Act. Although not an exhaustive list, there are a few changes that will be of interest to charities and not-for-profits as discussed below.

With respect to the standard of care for trustees involving investment powers, in addition to continuing an objective standard for trustees to “exercise the care, diligence and skill that a prudent person would exercise in making investments”, the New Act imposes a more onerous, subjective standard of care on trustees who have greater skill and knowledge as a result of their profession, occupation or business. Specifically, if a trustee possesses or ought to possess greater knowledge and skill relevant to the administration of a trust, they are expected to act with such greater skill and knowledge in the administration of the trust and exercise a greater degree of care than an objective prudent investor standard.

Further, certain rules imposed by common law are abolished under the New Act. For example, the New Act abolishes the rule that assesses a trustee’s decisions regarding investments on a case-by-case basis as well as the rule prohibiting losses to be offset by gains in the case of a breach of trust by a trustee, except in the case of a breach caused by dishonesty or impropriety by the trustee. Additionally, the common law rule requiring “even-headedness” in the distribution of funds and the contribution to expenses is abolished and replaced by a provision that allows trustees to use their discretion to allocate distributions and costs according to provisions outlined in the New Act.

The “rule against perpetuities”, which requires a trust to vest in a beneficiary within a specified period of time, has been abolished, as has the rule that prevented the creation of successive interests in land for future unborn generations. This provision, however, does not have retroactive effect in that it will not apply to trusts which relied on the rule against perpetuities in its creation or modification, or where a court has held that an interest previously violated the rule.

Ontario Regulations and Statutes in Force as of July 1^st, 2025

On June 30^th, 2025, the Government of Ontario released a backgrounder outlining changes to various pieces of legislation and regulations that came into force on July 1^st, 2025, including to the Agricultural and Horticultural Organizations Act and Child, Youth and Family Services Act, 2017, among others.

The Agricultural and Horticultural Organizations Act has been amended to simplify the financial review requirements for organizations with revenue of $50,000 or less. The amendment allows agricultural and horticultural societies and agricultural associations with revenue of up to and including $50,000 to conduct an informal review and submit a certificate of financial review annually instead of completing a formal audit as typically required for government grants and non-profit status. Organizations above this monetary threshold will continue to need to conduct a formal financial audit.

Various sections of the Supporting Children’s Future Act, 2024, which amended the Child, Youth and Family Services Act, 2017, have also been brought into force. This act is different from the Supporting Children and Students Act, 2025, discussed in the June 2025 Charity & NFP Law Update, which remains in Second Reading. The enactment of these changes is intended to reinforce oversight, enforcement and licensing measures in the licensed children’s out-of-home sector, including group homes and foster care. These changes also enhance oversight by requiring more frequent visits to the children in the care of out-of-home care organizations. Further, the changes require children’s aid societies and licensees to inform children on how to contact the office of the Ombudsman, and emphasize that early childhood educators may be subject to fines for failing to report concerns of child protection to a children’s aid society.

As well, the Ministry of Education introduced a new regulation under the Child Care and Early Years Act, 2014, requiring providers of licensed childcare programs to forward communications from the Minister of Education to the parents and guardians of enrolled children, using the communication method preferred by the provider.

​Read the August 2025 Charity & NFP Law Update