What types of transactions generally do not qualify as gifts and thus cannot be receipted?
No. The Income Tax Act only permits a registered charity to issue official donation receipts for income tax purposes for gifts.
Can a charity provide a donation receipt for a pledge?
No. A pledge or promise to make a gift is not in itself a gift. Therefore, a registered charity cannot issue an official donation receipt for a pledge. However, when a donor honours a pledge, a receipt can be issued.
Can a charity provide a donation receipt to sponsors?
No. Sponsorship is when a business makes a donation to a charity and, in return, receives advertising or promotion of its brand, products or services. Providing sponsorship to a charity or to a charitable event is not a gift, and a charity generally cannot issue a receipt for sponsorship.
How can a registered charity thank a business for its donation and still issue that business an official donation receipt?
A charity is certainly allowed to thank its donors. If a business receives the same level of recognition as all other donors, with no special treatment, and the recognition is nominal, this usually constitutes a simple acknowledgment, and a receipt may be issued for the full amount of the donation.
However, while a simple "thank you" is not an advantage, advertising is. If a business receives special recognition for its donation, or if it receives more than nominal recognition (for example, banners, advertising of products), this usually constitutes sponsorship.
It is difficult, if not impossible to establish a fair market value for sponsorship, and when the fair market value cannot be determined, a receipt cannot be issued.
Can a registered charity issue official donation receipts for gift certificates?
This depends on whether or not the donor is the issuer of the gift certificate. An issuer is the person (individual, retailer or business) that creates the gift certificate. A gift certificate purchased from the issuer and then donated to a charity is considered property and may be receipted for its eligible amount. However, a certificate donated by the issuer is not property, but rather a promise, and may not be receipted.
Thus a registered charities can issue an official donation receipt when
Yes. Under the Income Tax Act, an official donation receipt must show the name and address of the donor (and for an individual, his or her first name and initial).
However, the Canada Revenue Agency has made an administrative decision to allow registered charities to issue official donation receipts for anonymous gifts if the following procedures are followed:
No. Donors cannot choose the beneficiaries of their donations. A charity must have full discretion in deciding how to allocate its funds. When a charity does not have ultimate control over donated funds, or when a benefit accrues to the donor from donated funds, these funds do not constitute a gift and are not eligible for an official donation receipt.
A donor may be able to direct a gift towards a person, family, or other non-qualified donee if they have been identified beforehand by the charity as a recipient of its charitable program. However, the charity must be able to re-allocate all donated funds to other charitable programs or activities when it deems appropriate.
A donation subject to a general direction from the donor that the gift be used in a particular program operated by the charity is acceptable, provided that no benefit accrues to the donor or anyone not at arm's length to the donor.
- a court ordered transfer of property to a charity; the payment of a basic fee for admission to an event or to a program;
- the payment of membership fees that convey the right to attend events, receive literature, receive services, or be eligible for entitlements of any material value that exceeds 80% of the value of the payment;
- a payment for a lottery ticket or other chance to win a prize;
- the purchase of goods or services from a charity;
- a donation for which the fair market value of the advantage or consideration provided to the donor exceeds 80% of the value of the donation;
- a gift in kind for which the fair market value cannot be determined; donations provided in exchange for advertising/sponsorship;
- gifts of services (for example, donated time, labour);
- gifts of promises (e.g. gift certificates donated by the issuer, hotel accommodation);
- pledges
- loans of property
- use of a timeshare
- the lease of premises.
No. The Income Tax Act only permits a registered charity to issue official donation receipts for income tax purposes for gifts.
- To be considered a gift, there must be a transfer of property. Contributions of services (i.e., time, skills or effort) are not property. Therefore, they do not qualify as gifts for purposes of issuing official donation receipts.
- However, a charity may issue an official donation receipt if a person provides a service to the charity, the charity pays for the service, and the person then chooses to return an amount to the charity as a gift.
Can a charity provide a donation receipt for a pledge?
No. A pledge or promise to make a gift is not in itself a gift. Therefore, a registered charity cannot issue an official donation receipt for a pledge. However, when a donor honours a pledge, a receipt can be issued.
Can a charity provide a donation receipt to sponsors?
No. Sponsorship is when a business makes a donation to a charity and, in return, receives advertising or promotion of its brand, products or services. Providing sponsorship to a charity or to a charitable event is not a gift, and a charity generally cannot issue a receipt for sponsorship.
How can a registered charity thank a business for its donation and still issue that business an official donation receipt?
A charity is certainly allowed to thank its donors. If a business receives the same level of recognition as all other donors, with no special treatment, and the recognition is nominal, this usually constitutes a simple acknowledgment, and a receipt may be issued for the full amount of the donation.
However, while a simple "thank you" is not an advantage, advertising is. If a business receives special recognition for its donation, or if it receives more than nominal recognition (for example, banners, advertising of products), this usually constitutes sponsorship.
It is difficult, if not impossible to establish a fair market value for sponsorship, and when the fair market value cannot be determined, a receipt cannot be issued.
Can a registered charity issue official donation receipts for gift certificates?
This depends on whether or not the donor is the issuer of the gift certificate. An issuer is the person (individual, retailer or business) that creates the gift certificate. A gift certificate purchased from the issuer and then donated to a charity is considered property and may be receipted for its eligible amount. However, a certificate donated by the issuer is not property, but rather a promise, and may not be receipted.
Thus a registered charities can issue an official donation receipt when
- the donor is not the issuer of the gift certificate;
- and
the donor has purchased the gift certificate either from the issuer or another third party.
Yes. Under the Income Tax Act, an official donation receipt must show the name and address of the donor (and for an individual, his or her first name and initial).
However, the Canada Revenue Agency has made an administrative decision to allow registered charities to issue official donation receipts for anonymous gifts if the following procedures are followed:
- the donor establishes an agency or trust agreement to make the anonymous gift;
- the donor appoints an agent for the purpose of making a gift on behalf of the donor;
- the agent agrees to hold the funds in trust for the donor;
- the donor directs the agent to make a gift to a registered charity on the donor's behalf;
- the agent agrees to direct the registered charity to issue a receipt in the amount of the gift in the name of the agent in trust;
- and
the agent agrees to deliver the receipt to the donor for the purpose of establishing the details of the donation.
No. Donors cannot choose the beneficiaries of their donations. A charity must have full discretion in deciding how to allocate its funds. When a charity does not have ultimate control over donated funds, or when a benefit accrues to the donor from donated funds, these funds do not constitute a gift and are not eligible for an official donation receipt.
A donor may be able to direct a gift towards a person, family, or other non-qualified donee if they have been identified beforehand by the charity as a recipient of its charitable program. However, the charity must be able to re-allocate all donated funds to other charitable programs or activities when it deems appropriate.
A donation subject to a general direction from the donor that the gift be used in a particular program operated by the charity is acceptable, provided that no benefit accrues to the donor or anyone not at arm's length to the donor.
