NPO (nonprofit organization)

An NPO (non-profit organization) is an organization created to fulfill a social, community, or cultural mission, rather than to enrich its owners. When it generates a surplus (more money coming in than going out), that money is reinvested in its mission. It has its own accounting and tax obligations.

At a glance

An organization (or group) with a social mission, with no owners to enrich
Any surplus (the money left over at the end) is reinvested in the organization’s mission
It has its own tax returns and accounting obligations
Not to be confused with a registered charity (an organization that can issue tax receipts for donations)
Tax registration threshold raised to $50,000 in taxable sales (public service organization rule)

Why it matters

Many people believe that an NPO has “nothing to report” because it isn’t profit-driven. That’s not true. A sports club, daycare centre, or community organization must file tax returns, sometimes manage the GST (the 5% federal tax) and the QST (the 9.975% Quebec tax), and maintain rigorous accounting records to be accountable to its members and funders. Please note: An NPO is not automatically a registered charity (the only type that can issue tax receipts for donations). Bankeo connects you for free with a vetted accountant or CPA who specializes in the nonprofit sector, and we’re here to support you every step of the way.

When it comes to taxes, an NPO benefits from a higher “small supplier” threshold: it generally does not have to register with the GST and QST ...that it has a threshold of $50,000 in taxable sales per year, compared to $30,000 for a regular business, because it is a public service organization (source: Revenu Québec). It must still file its financial statements and, if a funder requires it, have an review engagement. Helpful reminder: An NPO is not the same as a registered charity, which is subject to stricter rules. To help you meet these requirements, Bankeo can connect you for free with a vetted accountant who is familiar with the nonprofit sector, and we’ll be right there to support you every step of the way.

Frequently asked questions

What exactly is an NPO?

It is an organization (such as a neighbourhood association, a minor league hockey club, or a community centre) that works to support a cause, not to make money for the benefit of individuals. If it has money left over at the end of the year, that money is used to further its mission; it is not distributed to the owners.

Does an NPO pay taxes?

In general, an NPO is exempt from income tax on income related to its mission. However, it still has certain obligations: it must file tax returns, and depending on its activities, it may be required to charge and remit GST and QST.

Are “NPO” and “charity” the same thing?

No. A registered charity can issue official receipts for donations and is subject to stricter rules; an NPO pursues a nonprofit mission without necessarily having that status. Bankeo connects you with a vetted accountant or CPA for free to ensure your financial statements and reports are accurate, at no cost to your organization, and we’re here to support you every step of the way.