How much business activity can a registered charity carry on before it risks its charitable status?

There is no simple percentage or dollar figure that draws this line — the Canada Revenue Agency instead applies a "related business" test. A registered charity can carry on a business activity without limit if it is linked to and subordinate to the charity's charitable purposes (a museum's gift shop, for example, or a hospital's parking operation), because that kind of activity is treated as an extension of the charitable work itself, not a separate commercial venture.

Carrying on an unrelated business — one that isn't connected to the charity's purposes — is much more restricted. Charitable organizations generally cannot carry on unrelated business at all, and private and public foundations face similarly tight limits, sometimes only permissible where substantially all the work is done by volunteers rather than paid staff.

Because the test looks at substance over labels, a charity that wants to run a genuinely commercial, unrelated enterprise typically needs a different structure entirely — most often a separate for-profit subsidiary corporation the charity holds as an investment, rather than running the business directly. Charities considering any new revenue-generating activity should get advice on which side of this line it falls before launching it.