The Vancouver Sun columnist David Baines has written an article entitled “Controversy swirls over library’s tax receipt issuance”. In that article he is questioning a couple of receipts issued by the RIchmond Public Library that were cumulatively for around $1.2 million. Any charity that issues receipts for gifts-in-kind should probably take note. It is really important that charities only issue official donation receipts in accordance with the Income Tax Act. In the case of large donations of gifts in kind such as books the charity ultimately will have an obligation to prove that the receipt was issued for no more than the fair market value of the donation on the date that the charity received the donation. I am not a valuator, but I understand that there are standards by which valuations should be done. If a valuation is done in a way that is lower than the standard such valuation may be worthless. There have been a number of cases that have gone to court where the courts have not accepted the valuations put forward by charities. A charity can have its registration revoked if it issues inflated receipts. More importantly for most charities the biggest concern is not CRA - it is stakeholders such as funders, donors, the public who may be less likely to support a charity if they are concerned with some of the charity’s practices and procedures.
Here is the article:
“Controversy swirls over library’s tax receipt issuance”
Here are some resources on receipting that may be helpful for registered Canadian charities:
For charities in the Vancouver area that are interested in legal compliance issues, you may find my November 6, 2012 seminar on “Charity Law 101” helpful:
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.