What is the Receipt Book?
The Receipt Book provides a set of tools and resources to help you prepare accurate charitable tax receipts.
When can a charity issue a donation receipt?
Under the Income Tax Act, a charity can issue official donation receipts for income tax purposes for donations that legally qualify as gifts. A gift is defined as a voluntary transfer of property without valuable consideration. A registered charity must determine whether or not the donation constitutes a gift.
To qualify as a gift, all three of the following conditions must be met:
- Some property, either in the form of cash or a gift-in-kind, is transferred by a donor to a registered charity.
- The property is given voluntarily. The donor must not be obliged to part with the property, for instance as the result of a larger contract or a court order.
- The donor is transferring the property to the charity without expecting anything in return. No benefit of any kind may be provided to the donor or to anyone designated by the donor as a result of a gift.
What cannot be receipted?
Charitable tax receipts cannot be issued for:
- a court ordered transfer of property to a charity;
- the payment of a basic fee for admission to an event or to a program;
- the payment of membership fees that convey the right to attend events, receive literature, receive services, or be eligible for entitlements of any material value that exceeds 80% of the value of the payment;
- a payment for a lottery ticket or other chance to win a prize;
- the purchase of goods or services from a charity;
- a donation for which the fair market value of the advantage or consideration provided to the donor exceeds 80% of the value of the donation;
- a gift in kind for which the fair market value cannot be determined;
- donations provided in exchange for advertising/sponsorship;
- gifts of services (for example, donated time, labour);
- gifts of promises (e.g. gift certificates donated by the issuer, hotel accommodation);
- loans of property
- use of a timeshare
- the lease of premises
What are the consequences for improper receipting practices?
A registered charity that issues an official donation receipt that includes incorrect or incomplete information is liable to a penalty. This penalty increases for a repeat offence within five years.
A registered charity that issues an official donation receipt that includes deliberately false information is also liable to a penalty and potentially to one year’s suspension of its charitable status. A registered charity that contravenes or continues to contravene the receipting requirements of the Income Tax Act could also have its registration revoked.
For more information, click here to order a free CD of resources developed by The Charities File.
Tools and resources
The Receipt Book Info Sheet gives an overview of the CRA’s guidelines for receipting.
A PowerPoint presentation provides information, supporting notes and examples on the CRA’s requirements for receipting, the limits of providing recognition gifts to donors, calculation of the Fair Market Value of donations, and guidelines on how to issue receipts correctly.
A video on receipting basics
A video on split receipting
The Receipting Logic Model helps to train staff and volunteers of registered charities to understand and apply the various rules related to issuing proper donation receipts. Sample receipts and a quick reference of related terms are also included.
An information sheet reviews the dos and don’ts of basic receipting.
The Receipt Book Quiz provides a series of short scenarios to help you review the application of the guidelines on receipting.
Specific Questions about Receipting covers frequently asked questions, including when a charity can and cannot issue a donation receipt, what to do in the case of sponsorships, pledges and gift certificates, how to correct errors or replace receipts, receipting by third party organizations, and the consequences of improper receipting practices.
Development Committee Responsibilities uses a scenario to highlight the roles that a charity’s fundraising or development committee can play in organizing an event.