A charity treasurer worrying about a CRA audit is usually worrying about the wrong thing. The statistical risk of being audited in any year is small. The consequence of the audit finding what CRA reports it most commonly finds is not a tax bill, and for a small organisation it can be existential.
Key Takeaway
CRA reports approximately 86,000 registered charities and roughly 4,500 other qualified donees, against a reported audit volume of between 150 and 200 charities per year, with 182 audit outcomes recorded for 2021 to 2022. That is roughly one fifth of one percent of the sector annually, alongside a reported 8,000 to 12,000 non-audit interventions each year. The Agency operates a published sanctions ladder running from education letters through compliance agreements to sanctions and revocation, and states its general intention to start with education while reserving the right to select the tool appropriate to the circumstances. Its three most commonly reported audit findings are an incomplete or incorrect return, incomplete or inaccurate donation receipts, and inadequate books and records. Notably, most revocations are not for misconduct: the overwhelming majority are delinquent revocations for failing to file the annual return, or voluntary.
A Note On Currency
Everything here is stated as verified in August 2026 and requires confirmation before reliance. Charity regulation has changed materially in recent years, including new rules on grants to organisations that are not qualified donees, and further change should be expected.
The statistics below come from CRA's own reporting on its charities programme, in some cases reaching us through professional commentary summarising those reports rather than from the reports directly. We identify which is which, and we flag one arithmetic discrepancy we could not resolve.
Reporting in this area also runs behind. Commentary notes that CRA published its 2023 to 2024 report in March 2025, the 2022 to 2023 report only in September 2024, and the 2021 to 2022 report in March 2024, describing the Agency as catching up after being far behind[1]. Detailed outcome figures available to us therefore describe a period some years past.
This is not legal or tax advice. A charity facing an audit or a compliance letter should obtain advice from counsel experienced in this area promptly, for reasons the recourse section explains.
Different In Kind
Why this article sits apart from the others in this series, and the framing a board needs.
In each preceding article the worst outcome was money: tax, interest, penalties, and in the most serious cases prosecution. Those are severe and they are quantifiable, and an organisation that can pay them survives.
Here the terminal sanction is revocation of registration. CRA's published guidance describes the progression as running through educational methods, compliance agreements, sanctions, and the ultimate sanction of revocation[2].
What revocation removes is the ability to issue official donation receipts and to hold property as a registered charity. For most charities that is the funding model, and this is our own observation rather than a statutory one.
The intermediate sanction has the same character in temporary form. CRA describes a sanction as a financial penalty, or a suspension of the charity's status as a qualified donee along with its ability to issue official donation receipts[2].
A suspension of receipting is a revenue interruption rather than a cost, and it lands on an organisation whose reserves are frequently thin and whose donors may not return.
So the risk calculus differs from a commercial audit. A business assesses exposure in dollars against its balance sheet. A charity should assess it against whether the organisation continues to exist in its present form.
The Odds
The statistical picture, which is genuinely reassuring and frequently misunderstood in both directions.
CRA material describes the sector as comprising approximately 86,000 registered charities and approximately 4,500 other qualified donees[3]. Professional commentary reports figures as at 31 March 2022 of 85,891 charities[4], consistent in magnitude.
Against that population, a specialist charity law practice states that CRA audits between 150 and 200 Canadian registered charities every year[5]. Commentary on the 2021 to 2022 programme report records 182 audit outcomes in that year[4].
One commercial source repeats the 150 to 200 range while adding that some sources suggest the number may be as high as 800 annually[6]. We report that qualification and give it little weight, since the source attributes it to no one and it is inconsistent with the reported outcome counts.
On the corroborated figures, 182 audits against roughly 86,000 charities is about one fifth of one percent of the sector in a year, which is our own calculation.
That number cuts two ways and both readings are legitimate. A well-run charity is unlikely to be audited in any given year. And because the population is so large relative to audit capacity, selection is necessarily risk-driven rather than random, which means an audit is not bad luck. It is a signal that something in the file attracted attention.
The Interventions Nobody Counts
The much larger programme sitting beneath the audit statistics.
Commentary on the 2023 to 2024 report states that CRA conducts between 8,000 and 12,000 non-audit interventions each year to promote education and voluntary compliance for charities that want to comply but may need some help to stay on track[1].
CRA material describes the range of treatments as extending from reminder and nudge letters through to audits[3].
The ratio is the point, and it is our own calculation. Between 8,000 and 12,000 non-audit interventions against roughly 182 audits is a ratio of somewhere between 44 and 66 to one.
So the overwhelming majority of a charity's possible contact with the Charities Directorate is not an audit at all. It is a letter.
Two practical consequences follow, and they are ours.
A letter from the Directorate should not be treated as routine correspondence to be filed. It is the first rung of a documented compliance framework, and it is the point at which the organisation's response is cheapest and most effective.
And a charity that receives a nudge or reminder letter and does not act on it has converted a low-cost intervention into a risk factor. The Agency's own guidance describes a progression, and progressions are entered rather than jumped into.
The Sanctions Ladder
The framework, from CRA's published guidance on applying sanctions.
The Agency describes four instruments. An education letter, used where non-compliance is relatively minor, explaining the rules and suggesting corrective actions[7].
A compliance agreement, reached through discussion with and agreement from the charity, with terms set out in a formal document signed by both the charity and CRA, identifying the problems, the steps the charity will take to bring itself into compliance, and the potential consequences of not abiding by the agreement[2].
A sanction, being a financial penalty or a suspension of the charity's status as a qualified donee along with its ability to issue official donation receipts[2].
And revocation of the charity's registration[2].
CRA states that as a general rule the Directorate intends to start with educational methods to obtain compliance, then move progressively through compliance agreements, sanctions, and the ultimate sanction of revocation if necessary[2]. Its audit programme description puts the same point as an education-first approach, meaning the Agency generally gives charities the chance to comply through education or a compliance agreement before moving to sanctions or revocation[8].
The compliance agreement deserves particular attention from a board, and this is our own emphasis. It is a document the charity signs, it records the organisation's own admissions about what went wrong, and it specifies consequences for failure. It should be reviewed by counsel before signature rather than treated as an administrative formality.
The Ladder Is Not A Staircase
The qualification CRA attaches to its own progression, which matters more than the progression does.
Immediately after describing the progressive approach, the guidance states that the Act allows the Agency to select the tool appropriate to the circumstances[2].
So the ladder describes an intention rather than an entitlement. A charity has no right to receive an education letter before a sanction.
The guidance illustrates the flexibility running in the charity's favour as well as against it. CRA states it would be more likely to use a compliance agreement than a sanction for a case of serious non-compliance resulting from the unauthorised actions of a single employee, where the charity is ready to take steps to rectify the situation and prevent a recurrence[2].
That example repays close reading, and this is our own analysis, because it describes what a charity can do to influence its own outcome.
Three elements appear in it. The non-compliance was attributable to an individual rather than to the organisation's design. The charity was ready to rectify. And it was ready to prevent recurrence.
Those are not facts a charity discovers; they are positions it can establish, by identifying the cause honestly, remediating before being told to, and changing the control that permitted the failure. A board that does all three before responding is presenting the fact pattern CRA's own guidance identifies as attracting the gentler treatment.
The guidance also records a limit on revocation for circumstances beyond a charity's control, stating that CRA does not generally revoke a registration where a charity is unable to file its return because of events beyond its control, such as a flood that destroyed its financial records[2].
On process, the guidance notes that the decision whether to educate or use a compliance agreement is made by individual auditors, who may discuss the matter with Charities Directorate staff, with the decision requiring the approval of their immediate supervisors[2].
Where Audits Actually Land
The distribution, which supports the education-first characterisation.
Commentary on the 2021 to 2022 report records 182 audit outcomes, the majority resulting in education letters at 81, followed by compliance agreements at 45. There were also 6 penalties, 5 voluntary revocations, one annulment, and 28 notices of intention to revoke. For seven audits, no changes resulted[4].
Expressed as proportions of the stated total, and these are our own calculations: education letters 44.5 percent, compliance agreements 24.7 percent, notices of intention to revoke 15.4 percent, no changes 3.8 percent, penalties 3.3 percent, voluntary revocations 2.7 percent, and annulment 0.5 percent.
For a much earlier period, CRA's own archived newsletter reports the outcomes of audits completed in 2006 to 2007 as 52 percent education letters where non-compliance was relatively minor, 22 percent requiring no changes, 20 percent compliance agreements, 3 percent revocation, and the remaining 3 percent comprising annulments, pre-registration audits and voluntary revocations[9].
Taken together, roughly seven in ten audits in the more recent year ended in education or a compliance agreement, which is consistent with the Agency's stated posture.
One commercial source states that more than 90 percent of audited charities are able to continue their charitable work[6]. We report that as an unverified claim; it is broadly consistent with the outcome distribution above, though the notices of intention to revoke figure complicates a simple reading.
A Shift Worth Noticing
A comparison between the two reported periods that we have not seen drawn, offered as our own analysis with appropriate caution.
The proportion of audits resulting in no changes fell from 22 percent in 2006 to 2007 to approximately 3.8 percent in 2021 to 2022.
Two readings are available and we cannot distinguish between them on the material we have.
The first is improved selection. If the Agency's risk models have become better at identifying files where something is genuinely wrong, fewer audits will find nothing. On that reading the shift reflects targeting rather than posture, and it is consistent with CRA describing a risk-based, multi-streamed approach designed around how risk is dispersed through the sector population[3], and with commentary noting continued implementation of a risk-based approach to identify various levels of compliance risk[1].
The second is a lower threshold for recording a finding. If matters previously closed without comment now generate an education letter, the no-changes category shrinks without any change in charities' conduct.
We would note two cautions before anyone relies on the comparison. The periods are fifteen years apart and the categories may not be defined identically. And the 2006 to 2007 figures are percentages of audits completed while the 2021 to 2022 figures are counts of outcomes, which may not be the same denominator.
The practical implication, if the first reading is right, is the one stated earlier: an audit is not a random event, and a charity receiving one should assume the file was selected for a reason.
An Arithmetic Gap We Cannot Close
A discrepancy in the reported figures that we should disclose rather than smooth over.
The itemised outcomes for 2021 to 2022, being 81 education letters, 45 compliance agreements, 28 notices of intention to revoke, 7 no changes, 6 penalties, 5 voluntary revocations and 1 annulment, sum to 173. The stated total is 182[4].
Nine outcomes are therefore unaccounted for in the itemisation available to us, which is our own calculation.
A plausible explanation exists in CRA's own material. A departmental brief notes that other outcome figures capture post-revocation audits, for example to ensure the revocation tax has been addressed[8].
That would be a category not listed in the commentary we relied on, and it would account for a residual.
We report the gap rather than assuming that explanation, because we have not seen the underlying table. The percentages we computed above are expressed against the stated total of 182 and would shift slightly if computed against 173.
The general point for a reader is one this publication makes often: figures reaching you through a summary of a report are not the report, and a small unexplained residual is a reason to check the source before relying on a proportion.
The Three Findings
What CRA reports it actually finds, which is the most actionable content in this article.
Commentary on the 2021 to 2022 report records CRA identifying several common non-compliance findings from audits: an incomplete or incorrect return, incomplete or inaccurate donation receipts, and inadequate books and records[4].
Read that list again and notice what is absent, because this is our own observation and we think it is the central insight for a charity board.
None of the three is about the charity's purposes, its programmes, its beneficiaries, or whether its activities are charitable. None involves misappropriation, self-dealing or improper benefit.
All three are administrative. They concern the accuracy of a form, the correctness of a document, and the adequacy of records.
The implication is that the most likely route from a well-intentioned charity to a compliance finding does not run through wrongdoing. It runs through a volunteer treasurer completing a return, a part-time administrator producing receipts, and an organisation whose bookkeeping reflects its resources.
That should be reassuring about intent and alarming about exposure, because administrative failures are precisely the kind that accumulate quietly in organisations that are otherwise doing exactly what they were registered to do.
It also means the remedy is available. Unlike a dispute about whether an activity is charitable, all three findings are fixable by process.
The Return
The first of the three findings, and the one that also drives most revocations.
The annual information return is the charity's principal public filing and the Directorate's principal window into the organisation.
Commentary notes that CRA released version 24 of the return to reflect new reporting requirements[1], which is a reminder that the form changes and that a treasurer working from last year's approach may be completing a different document.
Two practical points, both ours.
The return is public. Unlike a corporate tax return, a charity's information return is disclosed, which means errors in it are visible to donors, funders, journalists and researchers as well as to CRA. An incorrect figure is a reputational exposure independently of any compliance consequence.
And the return is internally checkable. Many of its schedules must reconcile to the financial statements and to each other, so a review that simply cross-checks the form against the statements before filing addresses a substantial share of the first common finding.
For a small charity without staff capacity, the proportionate control is a second reader. Someone other than the preparer comparing the return to the financial statements, with the comparison recorded, catches most of what this category contains.
Receipting, And Where The Rules Live
The second finding, and a structural difficulty that is not the sector's fault.
Commentary makes a point worth repeating in full. The receipting guidance is not contained in a single document. Instead there are multiple guidance documents, including one on official donation receipts by a newly registered charity published in 1993, one on issuing a receipt in a name other than the donor's published in 1994, one on receipts-issuing policy for amateur athletic associations published in 1995, and one on computer-generated receipts published in 2000[4].
The commentary notes CRA had begun work on consolidating guidance in this area[4], and readers should check whether that has since been completed.
The observation that follows is ours and it is offered in the charity's defence.
A volunteer treasurer attempting to issue receipts correctly must locate and reconcile guidance published across at least four documents over a seven-year span in the 1990s, none of which was written with the others in view, together with the regulatory requirements themselves.
That is a hard task performed by people who are frequently unpaid, and it explains why inaccurate receipts appear as one of three top findings across an entire sector.
It does not, however, reduce the consequence. Receipting failures go to the heart of the registration, because the receipt is what the registration exists to permit, and an improperly issued receipt affects the donor's return as well as the charity's compliance.
The proportionate control for most charities is to standardise. One template, checked once against current requirements by someone competent, used for every receipt, with any non-standard situation escalated rather than improvised.
Books And Records
The third finding, and the one that determines how every other question is resolved.
Inadequate books and records appears as the third of CRA's commonly reported findings[4].
The reason it matters disproportionately, and this is our own analysis, is that it is not merely one failing among three. It is the failing that prevents a charity from answering the other two.
A charity asked to substantiate a figure on its return, or to demonstrate that a receipt reflected an actual eligible gift of the stated amount, answers from its records. Where those are inadequate, the charity cannot resolve the question in its favour even where its conduct was faultless.
Two features specific to charities compound the difficulty.
Charities receive gifts in kind, restricted gifts, pledges, and revenue from a mixture of donations, grants, fees and fundraising events, each with different treatment. The record must distinguish them, and a single undifferentiated deposit record cannot.
And charities turn over volunteers and directors. Institutional memory is short, so a practice understood by everyone in one year may be unexplainable three years later when the auditor asks.
We would add a governance point. Records are a board responsibility in substance even where they are a staff function in practice, because the board is answerable for the registration and the registration depends on them.
Most Revocations Are For Not Filing
A finding that reframes the entire risk picture, and one that surprises most people.
Commentary examining CRA's data on compliance revocations states that the overwhelming majority of revocations are delinquent and voluntary revocations, that delinquent means a charity or other qualified donee failed to file its annual return, and that in 2021 to 2022 only 29 were revoked for cause[4].
So the dominant route to losing charitable registration in Canada is not misconduct discovered in an audit. It is failing to file a form.
That is worth stating plainly to any board, and this is our own emphasis. The single most consequential compliance obligation a registered charity has, measured by how often failure to meet it ends registrations, is filing the return on time.
It is also the obligation most susceptible to simple controls: a diarised date, a named person responsible, a board agenda item confirming filing, and a backup if that person is unavailable.
The voluntary category deserves a note too. A voluntary revocation is an organisation choosing to give up registration, frequently on winding up, and it is not a compliance failure at all. Its prominence in the statistics means aggregate revocation figures overstate the incidence of enforcement outcomes considerably.
And CRA's guidance records some tolerance where the failure was genuinely beyond the organisation's control[2], which is relief for disaster rather than for disorganisation.
The Sanction Between Penalty And Revocation
The instrument a board should understand best, because it is survivable and disruptive at once.
CRA describes a sanction as a financial penalty or a suspension of the charity's status as a qualified donee along with its ability to issue official donation receipts[2].
The operational consequences of a receipting suspension are our own analysis, and they run wider than the lost donations.
A charity that cannot issue receipts must tell donors so. Major gifts will not proceed, recurring donors may lapse, and any campaign in progress becomes unworkable.
Loss of qualified donee status also affects transfers from other registered charities and from funders whose own compliance requires that grantees be qualified donees, so the interruption reaches institutional revenue as well as individual giving.
And the suspension is a matter of public record, which means the reputational effect persists beyond the period itself.
The planning point for a board is that a suspension is a cash flow event of a kind most charities have not modelled. An organisation that has considered what it would do during such a period, and has reserves or a contingency plan, is in a materially different position from one that has not.
We would put that question to any charity board as a governance exercise rather than as a prediction, in the same way one would ask about the loss of a major funder.
The Newer Rules On Grants
A significant recent change that expands what many charities may lawfully do, and correspondingly what they must document.
Commentary records that CRA published guidance on registered charities making grants to non-qualified donees, to explain how charities can apply the new rules on qualifying disbursements[1].
We have deliberately not summarised the substance of those rules, because we have not reviewed the guidance and because a partial account of an accountability framework would be worse than none.
What belongs in an audit article is the structural observation, which is ours.
A regime permitting grants to organisations outside the qualified donee system necessarily replaces the simple question, is the recipient a qualified donee, with an accountability requirement about how the granting charity satisfies itself that funds were used for charitable purposes.
Simple status tests are cheap to audit. Accountability frameworks are documentary, which means the compliance burden shifts to records the charity must create and retain.
A charity making such grants should therefore expect that its documentation of the grant relationship is the thing that will be examined, and should build that documentation contemporaneously with the grant rather than reconstructing it.
Given the reported reporting changes to the return[1], a charity in this position should also confirm what the current form requires it to disclose about such grants.
Recourse And Representations
The procedural protections, and why timing matters.
CRA states that in all cases a charity will be able to make representations before the Agency comes to a determination on an appropriate compliance outcome, and that where CRA finds it reasonable to impose a sanction or to annul or revoke a registration it will send the charity a letter. A charity may avail itself of its recourse rights by filing an objection with the Appeals Branch[8].
One commercial source states that a charity disagreeing with a final decision can file a formal objection within 90 days of receiving the determination letter[6]. We report that period as stated and recommend confirming it, since limitation periods are exactly the kind of detail a general publication should not be relied on for.
The point we would stress is about the stage before that, and it is our own.
The right to make representations arises before a determination. That is the cheapest and most effective point of intervention, and it is the stage at which the remediation described in CRA's own example, being readiness to rectify and to prevent recurrence, can still influence the choice of instrument.
A charity that treats the representation stage as a formality and reserves its effort for an objection has spent its opportunity in the wrong order.
Litigation in this area is real and prolonged. Commentary references ongoing Federal Court of Appeal proceedings concerning a confirmed intention to revoke a national charity's registration[5], which indicates both that revocation decisions are contestable and that contesting them is a multi-year undertaking. We have not reviewed those proceedings and refer to them only as evidence of the process.
How Files Are Selected
What CRA says about selection, including one thing it says it does not consider.
CRA describes a risk-based and multi-streamed approach involving audits and various non-audit interventions based on the risk of non-compliance, designed to provide an appropriate balance of compliance treatments, and based on an understanding of how risk is dispersed through the sector population[3].
In the same material the Agency states that it never considers factors such as faith or religious denomination when selecting a charity for audit, and that sanctions or revocation are reserved only for serious or repeated cases of non-compliance[3].
We report that statement as CRA's own position. It appears in a departmental note prepared to answer questions on the subject, which is context a reader should have.
The phrase serious or repeated is worth isolating, and this is our own reading.
Repetition is a distinct trigger from severity. A charity that received an education letter, did not act on it, and presents the same issue subsequently has satisfied a criterion that a first-time equivalent failure would not.
That reinforces the point made earlier about non-audit interventions. The cheapest compliance investment available to a charity is acting fully on the first letter it receives, because doing so removes the repetition factor from any later assessment.
What The Auditor Actually Examines
The enquiry in practice, structured by the three reported findings. This section is our own analysis.
The return against the financial statements. Whether reported revenue, expenditures and asset figures reconcile, and whether the allocation between charitable programme, management and fundraising expenditure is supportable.
Receipts against the underlying gifts. Whether each receipted amount was an actual gift, whether the amount reflects any advantage received by the donor, whether the receipt contains the required content, and whether it names the correct donor.
Gifts in kind. How value was determined and by whom, which is a recurring difficulty because valuation is a judgment and the receipt asserts a number.
Fundraising events. Where the donor received a benefit, the eligible amount is not the full ticket price, and this is a common source of over-receipting by organisations acting in good faith.
Books and records generally. Whether they permit verification of the return and the receipts, whether they are retained for the required period, and whether they are available for examination.
Board minutes. Which evidence that decisions were made by the governing body, that conflicts were managed, and that the organisation directed its own activities.
That last item is easily overlooked by boards that keep informal notes, and it is the record that demonstrates governance rather than merely asserting it.
A Question For The Board
A short section addressed to directors, because the governance dimension distinguishes this sector.
Directors of a registered charity are responsible for an asset that does not appear on the balance sheet and cannot be insured: the registration.
The evidence in this article suggests three questions a board can usefully ask itself annually, and they are ours.
Has the return been filed, on time, every year, and who confirms it. Given that delinquency is the dominant route to revocation[4], this is the highest-return question on the list.
Has anyone competent reviewed our receipting practice against current requirements, and when. Given that the guidance is dispersed across documents from the 1990s[4], the answer for many organisations will be never.
If we received a letter from the Directorate, did we act on it fully, and can we show that we did. Given that repetition is a stated trigger[3], an unactioned letter is a stored risk.
None of the three requires expenditure. All three address the findings CRA reports it most commonly makes.
What Records Survive
Filed returns with proof of filing date. Because delinquency drives most revocations, evidence of timely filing is worth more than the return itself.
A receipting file. The template in use, the date it was last reviewed against requirements, who reviewed it, and the treatment adopted for gifts in kind and events.
Valuation support for gifts in kind. Independent where the amount warrants it, contemporaneous in every case.
Event calculations. Showing how the eligible amount was determined where donors received a benefit.
Board minutes recording decisions, including the approval of the return, any conflicts declared, and any response to correspondence from the Directorate.
Grant documentation where funds go to organisations that are not qualified donees, created with the grant rather than afterwards.
Correspondence from the Directorate and the organisation's response, kept together, so the charity can demonstrate that a prior letter was acted on.
What To Do
File the return on time, every year, with a named owner and a backup. Delinquency is the dominant cause of revocation, and it is entirely within the organisation's control.
Have someone other than the preparer reconcile the return to the financial statements. It addresses the most commonly reported finding at essentially no cost.
Standardise receipting on one reviewed template. The guidance is dispersed across documents from the 1990s, so improvisation is where errors originate.
Act fully on any letter from the Directorate, and record that you did. Repetition is a stated trigger for more serious treatment, and interventions outnumber audits by roughly fifty to one.
Treat a compliance agreement as a legal document. You sign it, it records admissions, and it specifies consequences. Have counsel review it before signature.
Use the representation stage. It comes before the determination, and it is where readiness to rectify and prevent recurrence can still influence which instrument is chosen.
Remediate before being told to. CRA's own guidance identifies a charity ready to rectify and prevent recurrence as attracting the gentler treatment.
Model a receipting suspension. It is a revenue interruption most charities have never planned for, and it reaches institutional funders as well as donors.
Document grants to non-qualified donees contemporaneously. Accountability frameworks are audited on documents, and those cannot be reconstructed convincingly.
The Limits Of This Analysis
Several caveats matter. This is not legal or tax advice; a charity facing an audit, a sanction or a proposed revocation should obtain advice from counsel experienced in charity law promptly. Everything is stated as verified in August 2026 and requires confirmation, and this area has changed materially in recent years. Detailed outcome statistics reach us through professional commentary summarising CRA programme reports rather than from the reports directly, and reporting in this area runs several years behind. The itemised 2021 to 2022 outcomes sum to 173 against a stated total of 182, a gap of nine which we could not resolve and which affects the percentages we computed; a departmental brief refers to an other outcome category capturing post-revocation audits, which may account for it. The comparison between the 2006 to 2007 and 2021 to 2022 outcome distributions spans fifteen years, the categories may not be defined identically, and the denominators may differ; our two readings of the shift are speculative and we cannot distinguish between them. The suggestion that audit volumes may reach 800 annually appears in one source without attribution and is inconsistent with reported outcome counts. The claim that more than 90 percent of audited charities continue their work is an unverified commercial statement. The 90-day objection period is reported from a commercial source and should be confirmed. We have deliberately not summarised the substance of the rules on grants to non-qualified donees, the detailed receipting requirements, the disbursement quota, or the revocation tax, none of which we verified. Litigation referenced in commentary has not been reviewed by us. The analysis of why the three reported findings are administrative rather than substantive, the observations on suspension as a cash flow event, the board questions, the records analysis and the reading of CRA's single-employee example are our own. This article does not address provincial incorporation and charitable regulation, fundraising legislation, employment matters, or the treatment of donors whose receipts are disallowed.
Frequently Asked Questions
How likely is our charity to be audited?
What does CRA most commonly find?
What actually causes charities to lose registration?
Will we get a warning before a sanction?
Can we influence the outcome?
What should we do with a letter from the Charities Directorate?
References
- Blumbergs / CanadianCharityLaw.ca. (2025, March 26). CRA Report on the Charities Program 2023 to 2024, on CRA conducting between 8,000 and 12,000 non-audit interventions each year to promote education and voluntary compliance, on the publication dates of successive programme reports indicating the Agency catching up after being far behind, on continued implementation of a risk-based approach allowing education and compliance agreements for lesser non-compliance and revocations or sanctions for more egregious non-compliance, on the release of version 24 of the annual information return reflecting new reporting requirements, and on the publication of guidance on registered charities making grants to non-qualified donees explaining the new rules on qualifying disbursements. Note: a Canadian charity law practice summarising a CRA report we did not access directly. canadiancharitylaw.ca
- Canada Revenue Agency. Guidelines for Applying Sanctions, on the compliance agreement being reached through discussion with and agreement from the charity and signed by both parties, identifying the problems, the steps the charity will take and the potential consequences of not abiding by it; on a sanction being a financial penalty or a suspension of the charity's status as a qualified donee along with its ability to issue official donation receipts; on revocation as the ultimate sanction; on the Directorate's general intention to start with educational methods and move progressively while the Act allows selection of the tool appropriate to the circumstances; on the example of preferring a compliance agreement where serious non-compliance resulted from the unauthorised actions of a single employee and the charity is ready to rectify and prevent recurrence; on not generally revoking where a charity cannot file due to events beyond its control such as a flood destroying records; and on decisions being made by individual auditors with the approval of their immediate supervisors. Note: a CRA primary publication. canada.ca — Guidelines for applying sanctions
- Canada Revenue Agency. Question Period Note: Charitable Registration and Revocation, published through the Government of Canada open data portal, on the sector comprising approximately 86,000 registered charities and approximately 4,500 other qualified donees; on the risk-based and multi-streamed approach involving audits and non-audit interventions ranging from reminder and nudge letters to audits, with outcomes ranging from education letters to sanctions and revocations, based on an understanding of how risk is dispersed through the sector population; on CRA never considering factors such as faith or religious denomination when selecting a charity for audit; and on sanctions or revocation being reserved only for serious or repeated cases of non-compliance. Note: a departmental briefing note prepared to answer parliamentary questions. search.open.canada.ca
- Canadian Council of Christian Charities. (2024, April 4). CRA's Report on the Charities Program 2021 to 2022, on sector population figures as at 31 March 2022; on 182 audit outcomes in 2021 to 2022 comprising 81 education letters, 45 compliance agreements, 6 penalties, 5 voluntary revocations, one annulment, 28 notices of intention to revoke and 7 audits resulting in no changes; on CRA's common non-compliance findings of incomplete or incorrect return, incomplete or inaccurate donation receipts and inadequate books and records; on the overwhelming majority of revocations being delinquent and voluntary with delinquency meaning failure to file the annual return and only 29 revoked for cause in 2021 to 2022; and on the receipting guidance being dispersed across multiple documents including ones published in 1993, 1994, 1995 and 2000. Note: a sector association summarising a CRA report we did not access directly; the itemised outcomes sum to 173 against the stated total of 182 as discussed in the article. cccc.org
- Blumbergs / CanadianCharityLaw.ca. Audits by CRA of Charities, on the statement that CRA audits between 150 and 200 Canadian registered charities every year, and on referenced litigation including Federal Court of Appeal proceedings relating to a confirmed intention to revoke a national charity's registration. Note: a Canadian charity law practice; the referenced proceedings were not reviewed by us. canadiancharitylaw.ca
- BOMCAS Canada. (2025, July 24). Why Your Canadian Charity Might Face a CRA Audit, on the 150 to 200 range with an unattributed suggestion that the number may be as high as 800 annually, on the education-first strategy and the progression through compliance agreements to sanctions including penalties or temporary suspension of receipting privileges, on the claim that more than 90 percent of audited charities are able to continue their charitable work, and on a 90-day period for filing a formal objection. Note: a commercial accounting publication; the 800 figure and the 90 percent claim are unverified and the objection period should be confirmed. bomcas.ca
- Canada Revenue Agency, Guidelines for Applying Sanctions, as above, for the description of the education letter as the first instrument in the progression. canada.ca
- Canada Revenue Agency. General Description of the CRA's Audit Program for Registered Charities, submitted to a Senate committee, on the Agency choosing the most appropriate course of action taking into consideration the circumstances of each case; on the education-first approach meaning charities are generally given the chance to comply through education or a compliance agreement before moving to sanctions or revocation; on charities being able to make representations in all cases before a determination; on notification by letter where a sanction, annulment or revocation is considered reasonable; on recourse rights by filing an objection with the Appeals Branch; and on other outcome figures capturing post-revocation audits such as to ensure the revocation tax has been addressed. Note: a CRA document submitted to a parliamentary committee. sencanada.ca
- Canada Revenue Agency. Registered Charities Newsletter No. 28, Summer 2007 (archived), on the outcomes of audits completed in 2006 to 2007 being 52 percent education letters where non-compliance was relatively minor, 22 percent requiring no changes, 20 percent compliance agreements, 3 percent revocation, and the remaining 3 percent comprising annulments, pre-registration audits and voluntary revocations. Note: an archived CRA publication describing a period long since closed, used here only for historical comparison. canada.ca — Newsletter No. 28
This article is provided for general informational purposes and is not legal or tax advice. Programme statistics reach the authors through commentary summarising CRA reports rather than from those reports directly, reporting in this area runs several years behind, and one arithmetic discrepancy is disclosed in the text. A charity facing an audit, sanction or proposed revocation should obtain advice from experienced charity counsel promptly.