The rules for tax receipting are strict, and failure to follow them closely could have repercussions on an organization's charitable status, and its ability to issue tax receipts in the future.

This article focuses on the following areas:

(1)   Characteristics of a donation:

The donation must involve the transfer of property (cash, investments etc) to the charity, it must be a voluntary transfer, and cannot confer an advantage on the donor (with the exception below). Since it involves a transfer of property only, tax receipts cannot be issued for donations of services (time volunteered, or services or rent waived).

(2)   Split receipting:

The charity is allowed to provide an advantage or benefit to the donor, as long as this is reflected in the tax receipt issued. The most common example of this is when fundraising dinners are held by charities. For instance, if a charity were to sell dinner tickets for, say $100, it would need to establish the fair value of the meal (say, $45) and issue a tax receipt for the difference ($55 in this example).

(3)   The form of tax receipts:

The form of tax receipts are specifically laid out by law, and individual tax receipts should contain the following information:

• A statement that it is "an official receipt for income tax purposes"
• The name of the charity, and its address as registered with CRA
• The Charity's Business Number
• The serial number of the receipt
• The place where the receipt was issued
• If a cash donation, the date or year the donation was received
• For a donation in kind, the day the donation was received, a description of the property, the tax cost of the gift (if acquired by the donor within three years) and name and address of the appraiser (when an appraisal has been done)
• The date the receipt was issued (if different from the date received)
• The name (including first name and initial) and address of the donor
• The amount of the donation (either the cash given, or fair value of a gift-in-kind),  less the advantage, and the net amount (the eligible amount)
• The name and internet address of Canada Revenue Agency
• The signature of an authorized signatory of the charity

In a previous article we outlined the process of receipting for donations in kind. Please visit our website to review this article. If you have any questions about this article, or would like us to address any other topic on tax receipting, charities, etc, please let us know.