This CRA letter discusses when a registered charity (a church), will fund the attendance of children to a week long camp that is associated with the church and when the children that will attend the camp are not children of the church members and otherwise deal at arm’s length with the members whether the donations would be considered to be gifts.
AUTHOR Danis, Sylvie
SUBJECT How two types of donations would be treated
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu’exact au moment émis, peut ne pas représenter la position actuelle de l’ARC.
PRINCIPAL ISSUES: Whether charitable donation receipts can be issued to church members where the church is paying for children to attend a week long camp held by a camp associated with the church and donations are solicited from church members for this particular purpose? Whether a charitable donation receipt could be issued for donations directed to 2 particular programs?
POSITION: Provided that a program is an activity that furthers one or more of the church’s stated charitable purposes, donations received from members of the church that are directed to this program should qualify as gifts for purposes of 118.1(1) of the Income Tax Act (the “Act”) and charitable donation receipts could be issued to the donors for the eligible amount of the gift.
REASONS: By definition under the Act, a charitable organization must devote its resources to charitable activities carried on by the organization itself. Under the proposed split-receipting rules, any benefits to the donors or to persons with whom the donor does not deal at arm’s length would result in an advantage under 248(32) and would reduce the “eligible amount” of the gift.
June 5, 2009
Dear XXXXXXXXXX :
Re: Charitable Donation Receipts
This is in response to your request for guidance with respect to the issuance of charitable donation receipts in two types of situations.
The first situation concerns a church, that is a registered charity, which proposes to fund the attendance of children to a week long camp that is associated with the church. The children that will attend the camp are not children of the church members and otherwise deal at arm’s length with the members. Provided that the camp program is an activity that furthers one or more of the church’s stated charitable purposes, donations received from members of the church that are directed to this program should qualify as gifts for purposes of 118.1(1) of the Income Tax Act (the “Act”).
We have not been provided with sufficient information and details to provide specific comments on the other situation which you referred to in your letter for which the church is soliciting donations on the basis of specific programs. Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. However we can provide you some general comments that we hope are helpful.
A registered charity may be involved in several programs in connection with carrying out its charitable objects. Generally, these programs will fail to meet the public benefit test if the class that can partake of the benefits provided by the charity is limited to specific named individuals. However, that is not to say that in the course of administering a charitable program a charity cannot define an eligible class that is not limited to named individuals, and subsequently use reasonable criteria to select one or multiple individual(s) from the class to receive assistance under this program.
Where a charity has more than one charitable program a donor may be given the option of directing their donation to one or more of the programs. Official donation receipts would reflect the “eligible amount” of the gifts.
Proposed subsections 248(30) to (32) of the Act contain new rules, referred to as “split-receipting” rules, in determining whether a transfer of property to a qualified donee, which includes registered charities, results in a gift for tax purposes where an “advantage” is provided to the donor or to a person who does not deal at arm’s length with the donor. Pursuant to proposed subsection 248(31) of the Act, the eligible amount of a gift is the excess of the fair market value of the property transferred to a qualified donee over the amount of the advantage provided.
Proposed subsection 248(32) of the Act provides that the amount of the advantage is generally the value, at the time the gift is made, of any property, service, compensation or other benefit received, or expected to be received in the future by the donor or a person who does not deal at arm’s length with the donor, as partial consideration for, or in gratitude for the gift.
We note that a charity must be able to support the basis for the determination of the amount of the advantage provided, if any. CRA’s position as noted in Income Tax Technical News No. 26 is that if the value of an advantage cannot be reasonably ascertained, no charitable tax deduction or credit will be allowed. In this regard, the donee will be required to identify the advantage and the amount thereof on any receipt provided to the donor in accordance with the proposed amendments to section 3501 of the Income Tax Regulations.
We trust the above comments are of assistance. However, as stated in paragraph 22 of Information Circular 70-6R5, the above comments do not constitute an income tax ruling and accordingly are not binding on the Canada Revenue Agency in respect of any particular situation.
F. Lee Workman
Charitable and Financial Institutions Sectors
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
Mark Blumberg is a lawyer at Blumberg Segal LLP in Toronto, Ontario. He can be contacted at or at 416-361-1982. To find out more about legal services that Blumbergs provides to Canadian charities and non-profits please visit http://www.canadiancharitylaw.ca or http://www.globalphilanthropy.ca
This article is for information purposes only. It is not intended to be legal advice. You should not act or abstain from acting based upon such information without first consulting a legal professional.
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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.