The Difference between a Non-Profit Organization and a Registered Charity?

The Income Tax Act does not define what a charity is; however, the common law case of Commissioners for Special Purposes of Income Tax v. Pemsel, [1891] A.C. 531 (H.L.) indicates that charities must fall within 4 purposes: relief of poverty, development of education, advancement of religion, and other charitable purposes.

A not-for-profit organization is one which which is not a charity -

1. Not be a charity
2. Be an organization for social promotion, civil improvement, pleasure, or recreation
3. Operate for a purpose to which it was specifically organized
4. Do not use its income for the benefit of any member, owner, or shareholder, with the exception for the promotion of amateur athletics in Canada.

The Legal Version (from the Income Tax Act, above):
149. (1)(l) a club, society or association that, in the opinion of the Minister [Minister of National Revenue], was not a charity within the meaning assigned by subsection 149.1(1) and that was organized and operated exclusively for social welfare, civic improvement, pleasure or recreation or for any other purpose except profit, no part of the income of which was payable to, or was otherwise available for the personal benefit of, any proprietor, member or shareholder thereof unless the proprietor, member or shareholder was a club, society or association the primary purpose and function of which was the promotion of amateur athletics in Canada.