Gifts to charities are often paid in cash, however in certain circumstances it may be more practical or beneficial to the charity or the donor to donate property other than cash. The Income Tax Act provides specific rules for donors to alleviate potential tax consequences in certain circumstances where property is donated.  The following is a selection of certain non-monetary gifts which have special rules.

Stocks, Bonds and Mutual Funds

If a donor were to sell investments such as stocks, bonds or mutual funds in order to make a cash gift to a charity, the donor would be required to report a capital gain and pay tax on the gain. If the donor donates the investment to the charity, they would receive a donation receipt for the value of the shares and the gain on the investment (the difference between the donor's cost and the value on the donation receipt) is not subject to tax.  

Flow through Shares

Flow through shares are a special type of investment which provides for a tax deduction to the investor upon purchasing the shares, as the investments are generally made in companies engaged in mineral exploration. When these shares are donated, the donor receives a receipt for the value at the time of the gift, however, under new rules introduced in the 2011 budget, the donor must pay tax on the capital gain on the share up to the initial cost of the investment. However, due to the nature of the initial deduction, donors can still receive a substantial benefit from donating these types of investments.

Cultural Property

Special incentives have been put in place to encourage Canadians to keep cultural property that is of outstanding significance and national importance. A taxable capital gain will not arise from the donation of this type of property and a claim for a gift of certified cultural property is not limited to a percentage of net income, whereas the tax credit for most other gifts are subject to a limitation of 75% of income.   These gifts must be certified by the Canadian Cultural Property Export Review Board and made to a designated institution. Details of this program can be found at the Canadian Heritage website at www.pch.gc.ca

Personal Services

A contribution of services, time, skills or efforts, which are not property, do not qualify as gifts. However, a charity may issue a donation receipt if a person provides a service to the charity, the charity pays for the service, and the person then returns the payment to the charity as a gift. This should be done by way of cheques rather than the service provider simply providing an invoice marked as paid. Since the federal donation credit for individuals on gifts greater than $200 is 29%, there may be an additional benefit of this arrangement for service providers who are subject to tax at less than the top rate of tax.