A Year In Review: Key Canadian Charity And Non-profit Developments From 2025

Before we shift our focus to the outlook for 2026, it is important to reflect on key developments from the past year.

While 2025 did not bring sweeping legislative reform for the charitable and non-profit sector, there were several meaningful developments, particularly around donation timing/receipting, evolving Department of Finance proposals that may affect charities (directly or indirectly), and some important decisions and policy signals worth tracking.

This article provides a high-level overview of the key 2025 developments of which Canadian registered charities and non-profits should be aware.

Key Developments from 2025

Commitment not to proceed with legislative amendments that would have politicized the charity law regime in Canada

The government's attempt to politicize the registered charity regime began with a 2021 campaign promise to revoke tax-exempt status from anti-abortion organizations, citing dishonest counseling practices. This evolved into proposed 2024 amendments to the Income Tax Act (Canada) ("Act") that would have mandated specific public disclosures for these groups and other third-party charities under threat of revocation of charitable status. However, facing significant pushback from legal experts and sector leaders over "viewpoint discrimination" and potential Charter violations, the Department of Finance abandoned the measures. Crucially, the sector argued that the charity law regime was not the appropriate venue to address issues of dishonesty or misinformation, as such concerns can already be effectively addressed through existing common law, legislative and regulatory requirements that require registered charities to act honestly and in a reasonably unbiased manner. Further, the sector advocated that concerns regarding medical misinformation could be handled through provincial consumer protection, health regulations, or other means instead. By late 2025 and into 2026, the government confirmed to stakeholders that these specific legislative changes were off the table, opting instead to rely on existing CRA regulations rather than amendments to the Act that were perceived by many in the sector as ideological.

Donation deadline / receipting extension into early 2025

Following the Canada Post disruption in late 2024, the Department of Finance proposed an extension that would allow eligible gifts made up to February 28, 2025 to be claimed on 2024 income tax returns. Draft legislation in support of the proposed extension was introduced in January 2025 and clarified that the extension applied to gifts of money and cash equivalents (e.g., cash, cheque, credit card, electronic payment). Notably, the draft legislation excludes gifts-in-kind, such as publicly listed securities . The proposed legislation, once passed into law, will extend the deadline for issuing official donation receipts for eligible 2024 donations to February 28, 2025.

Draft proposals to expand non-profit reporting released

The government released legislative proposals in August 2025 that would substantially broaden annual reporting obligations for nearly all Canadian non-profit organizations, beginning with the 2026 taxation year (including an expanded T1044 (non-profit information return) filing requirement and more comprehensive disclosure). The 2025 budget, however, noted that these proposals will not take effect immediately with implementation intended to be deferred until at least January 1, 2027, while consultation feedback is reviewed.

Draft trust reporting legislation

The Department of Finance re-released draft legislation (with amendments) on August 15, 2025 relating to the "enhanced" trust reporting rules enacted in 2022. The enhanced trust reporting rules have caused some uncertainty in the Canadian business community as well as the charitable sector, and generally deem bare trust arrangements, under which a trustee acts as agent for the beneficiaries, to be express trusts that are subject to significant reporting and compliance obligations under section 204.2 of the Income Tax Regulations (Canada). For charities, this is something to watch where trust structures are in the mix.

CRA modernization efforts

In 2025, CRA warned charities that it will be phasing out fax services in the coming months. Recently, CRA announced that it has begun the process of phasing out its fax line, requiring charities and their advisors to communicate with CRA electronically through the CRA's online My Business Account portal or by post. This is an administrative shift that may require charities and non-profits (and advisors) to ensure their internal processes and communications with CRA are aligned with the CRA's evolving digital/online approach.

US charities are not "qualified donees" under the tax treaty

In Priority Foundation v Canada (2025 FCA 180), released in October 2025, the Federal Court of Appeal addressed whether Canadian registered charities can make gifts to U.S. 501(c)(3) entities without jeopardizing charitable status. The Court ultimately rejected the argument that the Canada – U.S. tax treaty effectively deems those U.S. entities to be "qualified donees" under Canadian law. The CRA's revocation decision was, therefore, upheld, reinforcing the importance of complying with domestic Canadian charity tax laws regarding making disbursements to non-qualified donees in cross-border contexts.

Anti-money laundering rules apply to charities

On June 3, 2025, the Minister of Public Safety introduced Bill C-2, the Strong Borders Act. Bill C-2 proposed, among other things, to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to prohibit any organization that solicits charitable financial donations from the public from accepting cash deposits and/or donations of $10,000 or more in a single transaction (or a prescribed series of transactions). Once approved, charities that receive large cash gifts would need to refuse those gifts and instead direct donors to use traceable payment methods such as cheques, credit cards, or wire transfers. The measure also proposes that deposit‑taking institutions would be prohibited from accepting cash deposits into a charity's account from a third party who is not the account holder or otherwise authorized to give instructions on the account.

Certain portions of Bill C-2 were set out in Bill C-12, the Strengthening Canada's Immigration System and Borders Act, introduced on October 8, 2025 with the intention to accelerate approval for some less-controversial portions of Bill C-2. Though Bill C-12 does not include restrictions on charities receiving cash deposits and/or donations of $10,000 or more, the restrictions could come into effect if the original Bill C-2 is approved. The federal government affirmed its intention to proceed with the prohibition on accepting large cash donations in the 2025 Federal Budget, noting that regardless of whether a donation is "charitable", the prohibition is intended to apply.

Ontario property tax exemption for poverty relief organizations

A new case from Ontario dealing with a property tax exemption gave expanded access for "relief of the poor" organizations (Stamford Kiwanis Non-Profit Homes Inc v Municipal Property Assessment Corporation, 2025 ONCA 450). The Stamford case from June 2025 was a landmark Ontario Court of Appeal decision expanding access to charitable municipal tax exemptions under Ontario's Assessment Act, RSO 1990, c A.31. Importantly, the Court overturned its prior, more restrictive approach that required organizations providing relief to the poor to actively engage in "some form of endeavour" for relief of the poor, to be eligible for the municipal tax exemption. The Court found that this prior interpretation was not supported by the statute's language or legislative intent. Instead, the Court clarified that to show it is "organized" for relief of the poor, an entity must show that the primary purpose/use of the property is relief of the poor, that it operates at least in part for that purpose, and that the intended beneficiaries experience economic deprivation.

Sector guidance on donor-advised fund best practices

On October 27, 2025, the Canadian Association of Gift Planners Foundation released a guide entitled "Empowering Philanthropy: An Overview of Donor-Advised Funds", including a main guide and companion resources. DAFs are one of the fastest-growing areas of charitable giving in Canada and the release of a dedicated guide is a useful signal of continued sector focus on DAF structures and donor education in this area.

2025 Budget released with some impacts on the charitable sector

The 2025 Budget (released November 4, 2025) contains relatively limited measures affecting charities/non-profits, reflecting broader budget priorities, but still identifies several proposals warranting attention. In addition to reaffirming many of the measures listed above, relevant measures in the 2025 Budget include:

• A new proposal to broaden the 21-year anti-avoidance rule for trusts, closing planning that indirectly "resets" the 21-year deemed disposition rule through transfers between trusts (including via intermediary corporations). This is potentially relevant where charities utilize trusts for investment purposes, but the measure is likely not designed to catch registered charities.
• Reference to the proposed Customs Tariff amendment that would seemingly allow charities that import donated goods to qualify for refunds/waivers of customs tariffs, provided the goods are used directly in charitable programs and not resold. This will potentially be cost-reducing for certain charities if implemented, but the specific details of the situation will matter.

Confirmation that "advancement of religion" will not be removed as a charitable purpose

The government confirmed that it does not wish to remove the "advancement of religion" from the definition of charity and this was not in the 2025 Budget.

Conclusion

2025 was not a particularly exciting year for legislative, regulatory, and judicial developments affecting the Canadian charitable and non-profit sector. While there were notable reforms in anti-money laundering and anti-terrorist financing measures, improvements to property tax exemptions for poverty relief organizations, and ongoing attention to donor-advised fund best practices, the sector as a whole experienced relatively modest changes. Some proposals—such as the re-introduction of bare trust reporting rules and changes to eligible gift periods—are still awaiting final legislative decisions. Looking forward, it will be interesting to see what 2026 will have in store for the charitable and non-profit sector in Canada.

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