Can a charity lose its status for paying a director or officer for their services?

Yes, this is a real risk, and it's an area CRA scrutinizes closely. Registered charities are generally expected to have volunteer, unpaid directors and trustees for their governance role — the oversight and decision-making function they perform as board members. Paying a director or officer for that governance role in a way that isn't permitted can put the charity's registered status at risk.

That said, this isn't an absolute "directors can never be paid anything" rule. Reasonable payment for genuinely separate services a director provides to the charity — work that's distinct from their governance role itself, such as professional services delivered in a different capacity — may be permissible in some structures. The key issue is whether the payment is really compensating something separate from the director's board duties, and whether it's structured and documented in a way that holds up to scrutiny.

Because this is fact-sensitive and the line between "compensation for separate services" and "compensation for governance" isn't always obvious in practice, any charity considering paying a director or officer anything at all should get that specific arrangement reviewed before setting it up, rather than assuming it's fine because the amount seems reasonable or the work seems genuinely separate.