When should a Canadian charity not issue a “official donation receipt” (tax receipt)?

December 01, 2009 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: What's New from the Charities Directorate of CRA, Canadian Charity Law, Global Giving, Avoiding 'Charity' Scams

I am often asked “When should a Canadian charity not issue a “official donation receipt” (tax receipt)?”  First of all Canadian charities do not have to issue tax receipts - however, if they are going to issue official donation receipts, commonly known as tax receipts, then the registered charity must ensure that it is only issuing the receipt for a “gift” and subtracting any “advantage” that the donor may receive. If in doubt call CRA or contact a charity lawyer.  Here is a list of transactions that generally do not result in a tax receipt being issued.

What types of transactions generally do not qualify as gifts?
•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 (for example, gift certificates donated by the issuer, hotel accommodation);
•pledges;
•loans of property;
•use of a timeshare; and
•the lease of premises.

http://www.cra-arc.gc.ca/chrts-gvng/chrts/prtng/gfts/whts-eng.html

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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.

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