Split receipting
Split receipting is the method used to calculate the eligible amount of a gift for receipting purposes when the donor has received an advantage (consideration) in return for his or her donation.
To figure out the eligible amount of the gift, a charity has to subtract the fair market value (FMV) of the advantage from the FMV of the gift.
Criteria for split receipting
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Where a donor receives an advantage in exchange for a gift, a charity must be able to come up with an accurate figure for the FMV of that advantage.
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The gift, minus the advantage, still has to constitute a voluntary transfer of property and meet the intention to make a gift threshold.
What is the intention to make a gift threshold?
When the FMV of an advantage received for a gift is more than 80% of the FMV of the gift itself, the Canada Revenue Agency (CRA) generally considers that there is no true intention to make a gift. Therefore, a charity cannot issue a receipt.
Example
An individual donates $100 to a charity and in return receives a ticket to an art exhibit valued at $50.
FMV of gift $100
FMV of advantage (ticket received by donor) $ 50
Intention to make a gift threshold (80% of FMV of gift) $ 80
Since the FMV of the advantage received by the donor ($50) falls within the intention to make a gift threshold ($80) the charity can issue a receipt.
If the FMV of the advantage had been $81 or more, the intention to make a gift threshold would not have been met and the charity could not issue a receipt.
Sometimes, although not very often, the intention to make a gift threshold has not been met but there was a clear intention to make a gift. In these cases, the donor must be able to prove to the CRA that they intended to make a gift.
Understanding the de minimis rule
Certain advantages are of nominal value, and are considered too minimal to affect the value of a gift.
Advantages that have a combined FMV that is not more than $75 or 10% of the FMV of the gift, whichever is less, are considered too minimal to affect the amount of the gift. A charity does not have to subtract these advantages from the FMV of the gift when issuing receipts.
Example
An individual donates $100 to a charity and in return receives a mug valued at $6 and a pen valued at $2.
FMV of gift $100
Combined value of advantages $ 8
De minimis threshold (lesser of $75 or 10% of value of gift) $ 10
Since the combined value of the advantages ($8) is less than the de minimis threshold ($10), the charity does not need to subtract these advantages from the value of the gift when issuing the receipt.
If the FMV of the advantages had been $11 or more, the charity would have to subtract the advantages from the value of the gift when issuing the receipt.
In addition, if the FMV of the advantages had been more than $80 (80% of the FMV of the gift), the intention to make a gift threshold would not have been met and the charity could not issue a receipt.
The de minimis rule does not apply to:
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cash or near-cash equivalents (for example, redeemable gift certificates, vouchers, and coupons)
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the object of a fundraising event (for example, the meal at a fundraising dinner, or the green fees, cart rental and meal at a golf tournament)
The charity must always subtract the value of these items from the FMV of the gift before issuing a receipt.
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