Receipting by Canadian Registered Charities

August 01, 2010

Do we need an appraisal when valuing the fair market value of a donation to a charity in Canada?

CRA recommends that if a donation of a non-cash (in-kind) item is being made to a Canadian registered charity and it is worth more than $1000 that it be appraised by a knowledgeable, qualified and independent third party appraiser. For donations of in-kind goods of less than $1000 CRA suggests a “qualified staff member” can appraise the gift.  I would suggest that if you are trying to determine the fair market value of certain items that even if the items are worth less than a $1000 it is a good idea to get a proper appraisal - for example items that have been commonly abused such as art or bulk purchases.  Remember that the wholesale value of an item is often far less than the retail value and can sometimes be less than 1% of the retail cost.  If you are buying 500,000 cans of Diet Coke (as I frequently do!) you would not do so through a vending machine!  Also remember that if you cannot value either the donation or the advantage then the charity cannot issue a receipt.

read more

August 01, 2010

What is the “deemed” fair market value rule for donations to Canadian registered charities?

In some cases when a person is donating items (not cash) to a charity the charity does not give a receipt for the amount of the FMV of the item but instead the lesser of the fair market value and what the person paid for the item.  Here is a CRA note on the subject.

read more

August 01, 2010

Can a Canadian registered charity correct or replace a lost or incorrect official donation receipt?

Yes.  But it must be done properly.  Here is a note from CRA on the subject.

read more

August 01, 2010

What are the consequences for issuing incorrect or false official donation receipts?

It obviously depends.  If the official donation receipt is in some small way incomplete it could be a penalty equal to 5% of the eligible amount on the receipt. However if it is deliberately false information then it can be a penalty of 125% of the eligible amount on the receipt.  There are also some people sitting in jail right now for issuing fraudulent receipts.  Here is a note from CRA on this point.

read more

August 01, 2010

Can a gift out of inventory from a business to a charity qualify for an official donation receipt?

Generally yes as long as any advantage is subtracted.  See this note from CRA.

read more

August 01, 2010

Canadian charities and auctions - when can you issue a tax receipt wih respect to an auction?

When a person donates an item to a charity for an auction the charity can give the donor a receipt for the eligible amount of the donation (fair market value minus any advantage the donor received).  When a person bids on an item in general they would not be able to receive any official donation receipt unless certain CRA requirements are met as noted by CRA below.

read more

August 01, 2010

Can a Canadian charity issue an official donation receipt for a directed donation?

If a donor provides a donation with a request that those funds go to a specific person or family then in general a tax receipt would not be issued.  The CRA provides “However, donations subject to a general direction from a donor that the gift be used in a particular program operated by a charity are acceptable, provided that no benefit accrues to the donor, the directed gift does not benefit any person not dealing at arms’ length with the donor, and decisions regarding utilization of the donation within a program rest with the charity.”  Here is the CRA note on directed donations.

read more

August 01, 2010

Can a Canadian registered charity provide an official donation receipt for membership fees?

It depends on whether the member is receiving valuable benefits and the value of those benefits.

read more

August 01, 2010

What are gifts of certified cultural property to a Canadian registered charity

CRA’s document “Gifts and Income Tax” (P113(E) Rev. 09) is helpful for Canadian charities understanding what is a “gift” that can be receipted.  The document is located at http://www.cra-arc.gc.ca/E/pub/tg/p113/p113-e.html Here is an excerpt dealing with gifts of cultural property.

read more

August 01, 2010

Bequests - how are gifts to Canadian charities under a will in the testators year of death handled?

CRA’s document “Gifts and Income Tax” (P113(E) Rev. 09) is helpful for Canadian charities and taxpayers understanding what is a “gift” that can be receipted.  The document is located at http://www.cra-arc.gc.ca/E/pub/tg/p113/p113-e.html Here is an excerpt dealing with carrying forward tax credits.

read more

August 01, 2010

Should my charity issue an official donation receipt for a conditional gift?

In general you should not issue an official donation receipt for a conditional gift unless you are sure that the condition will be fulfilled. If in doubt best to wait till the condition is fulfilled and then to issue the receipt.

read more

August 01, 2010

How is art donated by an artist to a Canadian registered charity treated for tax purposes?

CRA’s document “Gifts and Income Tax” (P113(E) Rev. 09) is helpful for Canadian charities and taxpayers understanding what is a “gift” that can be receipted.  The document is located at http://www.cra-arc.gc.ca/E/pub/tg/p113/p113-e.html Here is an excerpt dealing with donations by artists (or art dealers) of art to Canadian registered charities or other qualified donees.

read more

August 01, 2010

Can a Canadian registered charity issue an official donation receipt for an anonymous gift?

There are 3 types of anonymous gifts.  The first one is that the charity knows the name of the donor but the donor requests that the charity not to divulge the identity of the donor so others will not know.  The receipt (which is not a public document) would have the donors name on it so there is nothing special about that.  The second one is that the donor requests that you keep their name secret but it is expecting you to let everyone know who made that anonymous gift!.  The third type of anonymous gift is truly anonymous - the charity does not even know the name of the donor.  The problem is that an official donation receipt needs to have the name of address of the donor.  One way to accomplish this is to follow the procedures set out below by CRA.  Another is to have the funds flow through a foundation or another charity which would provide the receipt and the foundation/charity would disburse the funds to the registered charity.

read more

August 01, 2010

Does a Canadian registered charity ever issue an official donation receipts to another reg. charity?

No.  Many foundations or charities do not understand that a Canadian registered charity does not issue an official donation receipt to another Canadian registered charity (or qualified donee ie. organization that can issue an official donation receipt) when it receives cash or gifts in kind from it.  When a Canadian registered charity receives a donation from an individual, business, foreign charity, or martian it can issue an official donation receipt.  Now the martian and the foreign charity probably will not be able to use such a receipt but you can issue it anyway!. Here is a note from the Canada Revenue Agency on the subject of “Gifts from other registered charities”

read more

August 01, 2010

Can an official donation receipt be issued by a charity for of a lottery ticket?

August 01, 2010

Does the Fair Market Value of an item donated to a Canadian charity include the taxes paid?

No. This may come as a surprise for some but see CRA’s explanation.

read more

August 01, 2010

Can official donation receipts be sent by registered charities by email?

August 01, 2010

CRA document “Gifts and Income Tax” helpful for Canadian registered charities when issuing receipts

CRA’s document “Gifts and Income Tax” (P113(E) Rev. 09) is helpful for Canadian charities understanding what is a “gift” that can be receipted.  The document is located at http://www.cra-arc.gc.ca/E/pub/tg/p113/p113-e.html

read more

August 01, 2010

Third Party Fundraisers by Canadian Charities and Receipting of Donations

Third party fundraisers, especially if run by volunteers, can be a very effective and efficient way to fundraise.  However, charities are not allowed to just outsource receipting functions.  Here is a document from CRA on third party fundraisers and receipting

read more

August 01, 2010

Is a payment to a registered charity in lieu of paying union dues considered to be voluntary/gift?

No.  Here is CRA’s view on why such a payment cannot be receipted.

read more

July 26, 2010

Macleans article “An artful scheme” on use cultural property as part of tax shelter scheme

Chris Sorensen of Macleans recently wrote a piece entitled “An artful scheme: One firm’s pitch to help people use a tax shelter by buying and then donating old photos is raising eyebrows in the art world and words of caution from experts”.  It discusses a scheme called VIA (Vintage Iconic Archives) Project.

read more

July 19, 2010

Tax preparer in Ontario guilty of charity tax fraud scheme

The CRA is cracking down on tax preparers and others who issue false charitable donation receipts.

read more

July 15, 2010

Charges laid against promoter of art-donation scheme

The CRA has laid charges against a promoter of an art donation scheme in which there was a donation of overvalued artwork to the Municipality of Larouche.  Municipalities are qualified donees entitled to issue official donation receipts just like registered charities.  It will be interesting to see if some of the promoters of similar schemes involving charities are also charged?

read more

July 14, 2010

Accountant liability for recommending charity tax shelter gifting scheme - Lemberg v. Michael Perris

This case involves an accountant, Mr. Michael George Perris, recommending a charity tax shelter scheme to his client that was unsuccessful.  The case deals with whether this accountant is a fiduciary and if so whether he breached his fiduciary duties to his client.  In this case the court found that the accountant had a fiduciary relationship with the client.  The accountant had received a fee from the promoters for referring the matter, had not appropriately disclosed the “secret commission” and the court found that he did not act in the best interest of his clients. The judge noted “The legal opinions, which lent apparent legitimacy to the scheme, were carefully crafted and laid out assumed sets of facts that bore little resemblance to the circumstances of the actual transactions that were recommended.”  The court found that despite the plaintiffs being sophisticated business people “The Lembergs were vulnerable, in the sense that they trusted Mr. Perris’s integrity, and the independence of his advice.”  It will be interesting to see if there are more cases against professional advisors such as lawyers, accountants and investment advisors, who may have recommended that their clients participate in such schemes.  There are already 3 class action lawsuits against law firms for providing the opinion letters in different charity gifting tax shelter schemes

read more

Do you require legal advice with respect to Canadian or Ontario non-profits or charities?

Contact

Charity Lawyer Mark Blumberg

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.

mark@blumbergs.ca
416.361.1982
Download vCard

Connect

Locate

Blumberg Segal LLP
Barristers & Solicitors
#1202 - 390 Bay Street
Toronto, Ontario
M5H 2Y2 Canada

Charity Law List

Join Blumbergs' non-profit and charities newsletter
View recent issue: January 2019