Receipting by Canadian Registered Charities

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.

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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”

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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.

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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

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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

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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.

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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.

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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.

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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?

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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

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

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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
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