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

Mark: 

In your above noted article ~ when should a charity not issue a tax receipt - you reference “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”.

I have noted at certain charity auctions I have attended, that if the BID value exceeded 120% of the deemed fair market value of the product, that the charity was issuing a receipt for 100% of the value that exceeded 100% of said fair market value.  (ie - product has FMV of $1000, bid = $1100 ... no charitable tax receipt.  But if bid = $1201, a receipt for $121 seemingly would be expected).

Is this an excpetion whereby said charity sought special permission from CRA?  Or is this a standard that could apply to all such “open bid / auction type” charitable events?

Thanks in advance,

J Nolan

[Dear J, thank you for the question.  If certain conditions at an auction are met then it is acceptable to issue an offiical donation receipt.  Here is more information on auctions http://www.canadiancharitylaw.ca/index.php/blog/comments/canadian_charities_and_auctions_-_when_can_you_issue_a_tax_receipt/  It appears to me, and math is not my strongest subject, so let me simplify - if an item has a fair market value of $1000, the price is listed before the auction for everyone to see, and a bidder were to bid $2000 then it would be acceptable, assuming the only value they got was the $1000 item and no other advantage that the charity could issue a receipt with the eligible amount of the receipt being $1000.  There is no need to get CRA’s permission on that.  Hope that helps.  Remember you can always call the Charities Directorate of the CRA at their 800 number if you have questions on receipting and would like their off the cuff comments.]

I just got CRA status for my charity and we had businesses donating gifts for two different events for silent auction and raffle.  Are we not able to issue a tax receipt to the businesses for these?

[Candice, it depends on whether they are in fact “gifts”.  If the items donated are “property” such as a TV then it may be permissable and there are rules depending on whether it is “inventory” or not.  If the item donated is a gift certificate for the services or products of the business then it is considered more of a pledge and not receiptable.  I have prepared 3 webinars on receipting that you might find helpful:
http://www.globalphilanthropy.ca/index.php/blog/comments/webinars_on_canadian_charity_law_-_charity_law_information_program_clip_by_/
Also you might want to review various FAQs on receipting at:
http://www.canadiancharitylaw.ca/index.php/blog/category/blog/category/receipting_by_charities/  ]

Hi Mark - regarding When should a charity not issue a tax receipt - are there circumstances where a membership is eligible for a tax receipt from a charity with registered status when offering benefits such as
Quarterly newsletter, Program access and Information updates, Participation in member surveys. Voting privileges.

Thanks in advance,

ED. Elizabeth you might find this link helpful http://www.canadiancharitylaw.ca/index.php/blog/comments/can_a_canadian_registered_charity_provide_an_official_donation_receipt_for_/ on the issue of membership and receipting.

Our charity has been receiving online donations on behalf of other registered charities that do NOT have online donation capability.    We have been acting as a conduit in a sense.  The money comes in and then we simply write a cheque to the charity that the donor indicated they wanted the gift given to.  Should WE be issuing the receipt or should the charity that actually receives the money be doing this…  (We have not been issuing them).  Both our organization and the others that receive the money have charitable status.

[Mark responds:  Laura it is a good questions - assuming that both organizations are Canadian registered charities then it may be possible for either organization to issue the receipts.  Essentially if the funds are a gift to charity A then it can receipt them.  If the funds are a gift to Charity B but passed through Charity A with a donor suggestion that they be provided to Charity B then Charity A is acting really as an agent or third party fundraiser and Charity B would issue the receipt.  An example of an organization that facilitates online donations is CanadaHelps.  CanadaHelps issues the receipt and sends the funds, minus an admin fee, to the registered charity suggested by the donor.] 

Keep in mind that the answer is very different if Charity B is not a registered charity under the Income Tax Act.  If Charity B is not a registered charity and Charity A just passes through or flows through the funds then charity A would be acting as a “conduit” or “lending its registrattion” which is not permissable and can result in revocation and penalties.

You might find the Receipting Kit on our http://www.globalphilanthropy.ca (TM) website helpful.  It is available for free.]