FAQ About Tax Receipts
Questions and Answers supplied by Sharon Barnes-Simmonds, CPA, CGA, Treasurer – P.A.C.E. Canada
Feb 19, 2017
Well it is that time of year when everyone wants to get their tax receipts for donations made in the previous year so that they can file their tax returns. With that in mind, let me seek to clarify some of the grey areas surrounding tax receipts as I seek to answer some Frequently Asked Questions:
TAX RECEPTS FAQs:
1. What donations DO qualify for a tax receipt?
Donations of cash, goods, land, or listed securities to a registered charity are eligible for a charitable tax receipt. For a donation to be eligible however, the transfer of ownership has to be voluntary.
2. What donations DO NOT qualify for a tax receipt?
Contributions of services (such as time, skills, effort etc); Admission Fees/Tickets to events; Raffle or Lottery tickets etc
3. How can I get a tax receipt for Gifts in Kind (items)?
A charity can issue a tax receipt for a donated item by using the Fair Market Value (FMV) for the item received. If the item is valued over $1,000 however, a valuation certificate from an official Appraiser needs to be obtained.
4. Although gift of services do not qualify for a tax receipt is there any other option?
Yes, if a Professional wants to donate their service to a charity the CRA will allow an exchange of cheques. So the professional will issue an invoice to the charity and they will pay the professional for their service and the professional can in turn give a cheque to the organization for the same amount as a cash donation.
5. What name is the charity allowed to put on the tax receipt?
A charity is only allowed to issue a receipt to the true donor of the gift. So if for example a corporation donates monies that was collected from its employees and there was a written declaration to do this, the charity can issue a tax receipt in each donor’s name.
6. Can a charity replace or correct a tax receipt?
Yes a charity can issue a replacement tax receipt.
7. What if you get something (benefit/advantage) in return for your donation?
When a charity gives you something in value in return for your donation, it is considered an advantage. The charity has to therefore subtract the value of the advantage from your donation in order to figure out the ‘Eligible Amount’ to place on your tax receipt.
8. Is there a date deadline for my gift to be received in order to get a tax receipt for that year?
Yes as per the CRA rules your donation has to be received by the charity or postmarked on or before December 31st for the gift to qualify for a tax receipt for that year. If the cheque is dated in the previous year but the postmark on the envelope is for the following year then the charity has to issue a tax receipt for the following year.
9. How long should I keep my tax receipts for?
If you file your taxes electronically, or if you do not send it to the CRA with your paper return, then you should keep your Tax receipts for five (5) years in the event the CRA requests to see them.
10. Is there a minimum donation amount that I can get a tax receipt for?
Yes the CRA has a minimum of $10 however different charities might set their own minimums.
11. Do I get one or individual tax receipts for multiple donations to the same charity?
If you make multiple donations throughout the year to the same charity then they can decide to amalgamate all the donations and send one tax receipt to you for the entire year. Per CRA rules this has to be received by the Donor by Feb 28th following the tax year.
12. If my spouse and I make a combined donation do we get one tax receipt in both our names?
Yes, we can issue one receipt in both names. However, we do recommend making 2 separate donations, and getting separate receipts. If you wish to make a single donation, you can specify the amount attributed to each person, and 2 separate receipts will be issued.