Webinar – Gifting and receipting
Please note: The content of this presentation is accurate as of the date it was aired on March 27, 2025.
Webinar Transcript
Slide 3 – Gifting and receipting
Dylan: Let me welcome you to the Canada Revenue Agency’s webinar on gifting and receipting.
Thank you for taking the time to join us today.
My name is Dylan and I’ll be your host for today’s talk.
Slide 4 - Objective
Dylan: The purpose of today’s presentation is to provide charities information and resources on receiving gifts and issuing receipts.
The presentation is split into 2 parts.
For part 1 on gifts, we’re going to cover:
- what qualifies as a gift, and
- the different types of gifts.
For part 2 on receipts, we’re going to cover:
- what to consider when determining the amount of a receipt,
- when they can be issued, and
- what information must be included on an official donation receipt.
Before we wrap up, we’ll also touch quickly on the Extension of the deadline for making 2024 charitable donations and what it means for charities.
[Person writing on a tablet with a stylus.]
Slide 5 – Part 1: Gifts
Dylan: This brings us to Part 1 of the presentation.
Let’s start by explaining what exactly a gift is: A gift is a voluntary transfer of property without valuable consideration to the donor.
However, a transfer of property for which the donor received an advantage will still be considered a gift for purposes of the Income Tax Act, as long as we are satisfied that the transfer of property was made with the intention to make a gift.
The existence of an advantage will not necessarily disqualify the transfer from being a gift, if the amount of the advantage does not exceed 80% of the fair market value of the transferred property.
If you are feeling confused, don’t worry, I am going to break down each element of a gift and explain it in easy-to-understand concepts.
Slide 6 – What is property?
Dylan: Cash gifts includes debit, cheque and credit card payments. Non-cash gifts are other tangible gifts that include:
- capital property, such as:
- Equipment, land, buildings, and stocks
- personal property, such as:
- Artwork, furniture, and clothes
- life insurance policies
- ecologically sensitive land, and
- gifts of Canadian cultural property
It’s important to take a moment here to note that a charity is not required to accept every donation that is offered. You can turn down a gift if you have reached the cap on a project or if the type of gift offered causes a financial burden to your organization. For example, a food bank could decline a piece of artwork offered as a gift, as it does not directly relate to the work being done.
Another example could be a library that has limited space. It could refuse a donation of books, since it has no space for them. Whichever the reason, the charity has the final decision of whether or not to accept a donation.
Slide 7 – Gifts
Dylan: To figure out if a gift has been made, ask yourself the following questions:
- Was the gift made voluntarily? If the gift was made involuntarily—if we’re talking about an obligation like a court order—then it is not eligible for a receipt.
- Was there a transfer of property? Did your charity actually receive property of any type? Gifts of service or promises do not qualify as transfers of property. We’ll cover this later.
- Was the gift directed to a specific person, family, or non-qualified donee? A donation that specifies that the gift be used in a particular program operated by the charity is acceptable (for example, a hospital purchasing a one-million-dollar piece of equipment) but the donor can’t specify an individual beneficiary.
- Did the donor receive an advantage? If a donor receives an advantage in exchange for a donation, then part of the donation may not be included in the receipt. We’ll also cover this later.
It’s important to review all these questions prior to accepting a donation. This way, you can confirm if the donation is a gift or not.
Slide 8 – Donation of services
Dylan: One of the most common questions we receive from charities is whether or not gifts of service qualify for donation receipts. Let’s start by discussing what constitutes a gift of service. Simply put, a gift of service is when an individual or a business gifts time, skill and effort for things like cleaning, roof repairs, catering, etc.
Gifts of services do not qualify as property, as we discussed in the previous slide. As such, you cannot issue an official donation receipt for these services.
However, it may be possible to issue an official receipt in some limited circumstances, either by limiting the receipt strictly for the property where a gift involves property and services, or by structuring the donation of services into two separate transactions.
Let’s illustrate this with an example.
Slide 9 — Transactions involving services—Example
Dylan: Here, it is important to note that this scenario doesn’t account for taxes that Joe’s Carpentry Company is required to collect and submit.
Let’s say you operate a food bank and need to build wooden shelves to store bulk items, and Joe’s Carpentry Company offers to build them as a donation to your charity. The total cost is $200 in building materials and $300 in labour, plus applicable taxes. In this example, you cannot issue a donation receipt for the $500 gift of services. You can, however, offer a receipt in the following two ways:
- You can issue a donation receipt for $200, which covers the fair market value of the building materials. These building materials constitute a transfer of a non-cash gift.
- Or there can also be an exchange of cheques, which means that Joe’s Carpentry completes the new shelving for the food bank and issues an invoice to the charity for the full $500. The charity pays the invoice and Joe’s Carpentry then voluntarily returns the payment to the charity as a gift, making the transfer a cash gift. The merchant must still collect and submit applicable taxes.
A charity should never issue an official donation receipt to a service provider in exchange for an invoice marked paid. This alone does not establish that payments were exchanged. There needs to be an audit trail within your books and records to show both transactions for the donation to be constituted as a gift.
Slide 10 – Gift certificates or gift cards
Dylan: Now, let’s talk about gift certificates or gift cards. It is quite common for a charity to receive a donation of a gift card.
First, if the gift card was donated directly by a store, then it is not considered property, but more like a promise. So, the charity won’t be able to issue a receipt until the gift card is actually redeemed (meaning it was used to buy something).
However, if the gift card was gifted by a person who bought it, then the charity can issue a receipt for the eligible amount of the gift.
If you found that confusing, let me explain it a bit more. The reason why a donation receipt can be issued for a gift card that was donated by a person who purchased it (as opposed to a store who just issues it) is because the consideration paid for by the person is what becomes the property that is the subject of the gift. However, if the gift card was donated by a store, then it’s nothing more than a promise to make goods (or services) available to the certificate holder. No one paid for the gift card, and, therefore, it isn’t considered property.
Hopefully, that was a bit clearer.
[Gift certificate]
Slide 11 – Directed donations
Dylan: Directed donations - Basically, when people donate to a charity, they can request that their donation be used for a certain program, but cannot request that their gift be directed to a specific beneficiary.
Here are a few examples: If Joanne donates to a hospital, she can request that her donation be spent on medical equipment. Bill can donate to a disaster relief program and ask that his donation go to fire victim relief, but can’t ask that it be used for his friend Josh whose house was destroyed in a fire.
Having said that, a charity can also reallocate donations within their programs as they see fit. It’s important to note that the charity has the final say over how donations are used, because, if donors retain control, then the donations are no longer considered gifts at law, and a receipt can’t be issued. We suggest that your charity clearly state on its website or fundraising material where it will be reallocating donations once a target is reached for a certain program, or if it cannot be reached . This will help donors decide whether or not they want to proceed with their donation.
Now, you might be wondering whether a donor can request to have their donation returned to them. Once gifted, your charity cannot return a donation to a donor. Why? Because a charity can only use its assets to further its charitable purpose. Returning a gift it has taken ownership of would be like gifting to a non-qualified donee.
Occasionally, a charity may be presented with a court order requiring it to return a gift. In such a situation, it may be legally obligated to do so but should get legal advice in deciding how to respond. Other than this, a charity should never return a completed gift to a donor.
Slide 12 – Part 2: Receipts
Dylan: This brings us to Part 2 of the presentation.
Slide 13 – Receipts
Dylan: Let’s talk about receipts. Only registered charities or other qualified donees may issue official donation receipts. For donors, these are required to claim a tax credit. No receipt, no credit. It’s as simple as that.
Slide 14 – Qualified donees
Dylan: Under the Income Tax Act, qualified donees are organizations that can issue official donation receipts for gifts they receive from individuals and corporations.
This graphic shows exactly what types of organizations are considered qualified donees.
The largest category is registered charities, but there are additional categories that also form part of the qualified donees status:
- Registered Canadian amateur athletic associations
- Registered national arts service organizations
- Registered journalism organizations
- Municipalities
- Municipal or public bodies performing a function of government in Canada
- Registered universities outside Canada
- Low-cost housing corporations for the aged
- His Majesty in right of Canada, a province, or a territory, and the United Nations and its agencies, and
- Registered foreign charities that have received a gift from His Majesty in right of Canada
You can find a listing of all qualified donees at canada.ca/charities-giving. The listing includes all registered charities’ T3010 information.
Slide 15 – Amount of advantage
Dylan: Let’s now move on to the next topic: Amount of advantage. Basically, before you can issue a receipt, you need to determine whether the charity provided any kind of consideration for the gift, whether it’s to the donor or even another person. So, what is an advantage?
The amount of advantage is essentially the total fair market value, at the time the gift is made, of all property, services, compensation or other consideration made or payable in relation to the gift. We will go through some specific examples over the course of the next few slides.
Some examples of an advantage may include:
- dinner at a fundraising event
- performance at a fundraising event
- door prizes at a fundraising event, and
- use of property
If there is an amount of advantage, then part (or all) of the donation may no longer qualify for a receipt. When there is no amount of advantage, a receipt may be issued for the full amount. Keep in mind that you may need to consider any future advantages in this consideration, for example, if an individual donates $50 to your charity and will in turn receive 20% off the price of their admission to your next fundraising gala.
Slide 16 — Split receipting — Promotional item
Dylan: Here’s where it gets interesting. Let’s take a look at this example to better understand how receiving an advantage works. So, if Joey made a donation and received a promotional item, like a water bottle, then the split receipting method would be used to calculate the correct amount to put on the receipt. For example, if you donated $10 and received a water bottle valued at $2, then Joey would be issued a receipt for $8.
This formula is true most of the time but not if the amount of advantage is over the nominal threshold, or the amount of advantage is more than 80%. We’ll cover this in more detail later in the presentation.
Slide 17 – Fair market value (FMV)
Dylan: On the previous slide, I mentioned “fair market value,” which is the highest price in dollars that a property/item would bring in an open and unrestricted market, between a willing buyer and a willing seller who are both knowledgeable, informed, prudent, and who are acting independently of each other.
Keep in mind that if the fair market value cannot be determined, then the charity cannot issue an official donation receipt.
Slide 18 – Determining fair market value (FMV) of gifts in kind
Dylan: So, how do you determine the fair market value of a gift in kind?
Basically, if the value of the property is under $1,000, then a person with sufficient knowledge can determine the fair market value. Usually, the person who bought the property could determine the value by showing the receipt, but keep in mind that taxes like the GST, HST and TVQ are not part of the fair market value. So, for example, if your charity receives a TV as a donation, and one of your volunteers sells TVs at a local store, they would be able to determine the fair market value.
Slide 19 – Deemed fair market value (FMV) (1/3)
Dylan: Under the deemed fair market value rule, the value of the property transferred will either be the lessor of the fair market value of the property and its adjusted cost base. We call this the “lesser of” rule.
Having said this, there are exceptions to the rule, and in these cases, the value of the gift is the fair market value:
- gifts made as a result of a taxpayer’s death
- gifts of inventory
- gifts of real property located in Canada
- gifts of publicly traded securities
- gifts of certified cultural property, and
- ecological property, if the recipient charity is not a private foundation.
Slide 20 – Deemed fair market value (FMV) (2/3)
Dylan: The deemed fair market value rule applies to gifts if one of the following situations applies:
- the donor acquired the gift less than three years before donating it
- the donor initially acquired the gift as part of a tax shelter arrangement, or if
- the donor acquired the gift less than 10 years before donating it, if one of the main purposes being to gift the property to a qualified done (for example, a registered charity)
Slide 21 – Deemed fair market value (FMV) (3/3)
Dylan: It’s very possible that you encounter a tricky situation where you aren’t sure how to assess the value of a gift.
Hopefully, this example will help you better understand how the deemed fair market value works. Let’s say that someone bought a painting for $250 and donated it to your registered charity six months later. Suppose that, during those six months, the painting gained value and is now worth $1,000.
In this situation, would we apply the fair market value or the deemed fair market value rule?
If you guessed the deemed fair market value rule, you are right!
If we look at the deemed fair market value rule conditions, since the gift was acquired less than three years ago, we would apply the deemed fair market value, which is $250.
Slide 22 – Intention-to-give threshold
Dylan: This brings us to the intention-to-give threshold. In other words, did the donor have the intention to give when they made their donation. If the value of the advantage is more than 80% of the donation, then we say that there was no intention to make a gift, and the charity should not issue a receipt.
For example, if Carly donates $100 to a charity and receives a dinner package worth $90, then a receipt cannot be issued. That’s because the advantage is more than 80% of the donation.
On the other hand, if Jim donates $150 to a charity and receives a dinner package worth $90, then a receipt can be issued. As you can tell, the advantage is less than 80% of the donation.
Slide 23 – Nominal threshold
Dylan: In some cases, the advantages are considered too small to affect the value of a gift. This is called the nominal threshold.
The nominal threshold means the advantage does not need to be deducted from the value of the gift, if the FMV of the item is less than the lesser of $75 or 10% of the gift.
Keep in mind that this rule does not apply to cash or near-cash equivalents and core elements of a fundraising event. As an example, for a dinner event, the dinner cannot be considered under the nominal threshold as it is the core element of the fundraising event.
Slide 24 — Nominal threshold—Examples
Dylan: Let’s take a look at an example where you would use the nominal threshold rule to better understand it. Suppose that someone donates $200 to a charity and receives a t-shirt worth $15 in return. Because the t-shirt is less than 10% of the $200 donation, the charity would have to issue a receipt for the full $200.
Now, let’s say that someone donates $50 to a charity and receives a keychain worth $10 in return. Because the keychain is more than 10% of the $50 donation, the charity must use the split receipting rule and issue a receipt for $40.
Finally, let’s say that someone donates $2,000 to a charity and receives a wine bottle worth $100 in return. Even though the wine bottle is less than 10% of the $2000 donation, the charity would still have to use the split receipting rule, as the wine bottle is worth more than $75. In this case, the charity would have to issue a receipt for $1,900.
Slide 25 – Fundraising event example (1/4)
Dylan: Let’s also go over a more complex example of how to calculate the advantage. Let’s say that a charity is holding a fundraising event with a reception and concert. The tickets are $200 each, and the charity is selling 500 of them.
The kinds of amenities provided by the charity for purchasing a ticket worth $200 are the following:
- concert with a FMV of $80
- food at the reception with a FMV of $20 per person
- gift bags with a FMV of $17
- door prizes with a FMV of $1000 (or $2 per ticket)
- raffle tickets that are sold separately
- cash bar at the reception
The last items on this list, the raffle ticket and cash bar, are not considered advantages. This is because the raffle tickets are sold separately from the event, and because the guests at the event are purchasing their own drinks at the cash bar.
[Microphone]
Slide 26 – Fundraising event example (2/4)
Dylan: Let’s start with the gift bags and the door prizes. Yes, they are considered advantages as they are included in the ticket price. However, in this case, we need to consider the nominal threshold, which, remember, we said means an advantage doesn’t need to be deducted from the total value, if it is “not a cash or near-cash equivalent or a core element of the fundraising event” and it is less than the lower of $75 or 10% of the overall $200 ticket price.
This is because 10% of $200 is $20. And the gift bag, which is worth $17, plus the $2 door prize ticket is less than $20. Therefore, it is not considered an advantage.
Slide 27 – Fundraising event example (3/4)
Dylan: Next are the concert and food at the reception, which are worth $80 and $20 respectively. They are core elements of the event. Both the concert and dinner are considered advantages worth $100 in total, so this amount must be used to calculate the amount of the receipt.
[Band playing and spectators watching at a concert]
Slide 28 – Fundraising event example (4/4)
Dylan: Let’s go over the event’s calculation. We’ve already determined that the advantages at this event are the concert ($80) and reception ($20). At this point, you might be tempted to issue a receipt for $100. This would be after calculating that $200, the cost of the ticket, minus the advantages worth $100, equals $100.
However, you need to be careful! We need to take into consideration the intention-to-give threshold, which states that, if the advantage is above 80% of the donation, then there was no intention to make a gift. In our example, however, the advantage is below 80%. Therefore, the donor is considered to have made a gift, and the charity can issue a receipt with an eligible amount of $100.
Slide 29 – Auctions (1/2)
Dylan: Another area where charities frequently need to decide whether or not they want to issue donation receipts is at an auction event.
Generally, there are two opportunities to issue donation receipts at a charity auction event. First, a charity can issue a receipt when someone donates a property to be auctioned, and second, you can issue a receipt when an item is purchased during the auction. Remember, the charity is not obligated to issue donation receipts in this type of situation; it’s quite common for charities to not issue donation receipts. What’s important is to state this at the beginning of your auction or event within your marketing ads and posters. If you choose to issue receipts, there are factors you will need to consider.
[Gavel]
Slide 30 – Auctions (2/2)
Dylan: If someone donates property to be auctioned, then the charity can issue a receipt at the FMV or deemed FMV.
You should remember that gifts of service and gift cards from a store are not considered gifts like we’ve discussed earlier in our presentation. Also, if the FMV cannot be determined, then the charity cannot issue a receipt.
Slide 31 – Auction events
Dylan: If someone purchases an item during the auction, successful bids must satisfy the intention-to-give threshold, which is the 80% rule. The FMV of each item should also be displayed during the auction.
Consider this example: let’s say that a painting with a FMV of $1,000 is auctioned, and that someone bid $1,300 for it and won. Before issuing a receipt for this item, the charity will have to take a few things into consideration.
Did the bidder satisfy the intention-to-give threshold? In this case, the answer is yes, because $1,000 of $1,300 is 77%, which is below the 80% threshold. Therefore, the charity can use the split receipting rule and issue a receipt for $300, which is the difference between the bid and the FMV of the painting.
Here’s a little tip: If the item up for bid has a FMV that can be determined, you could show bidders the amount they need to bid to receive a donation receipt. You simply take the FMV of the item and multiply this by 1.25. Any amount over this bid will indicate that a donation receipt can be issued. With our example here, the FMV of the painting is $1000. If you multiply this by 1.25, the bidder would need to place a bid of over $1,250 to receive a donation receipt.
[Person holding gavel with people watching]
Slide 32 – Transactions generally not eligible for receipts for income tax purposes:
Dylan: There are also transactions generally not eligible for receipts for income tax purposes. We’ve already seen a few of them, but there are many more:
- basic fees for admission to an event or program
- payment for a lottery ticket or other chance to win a prize
- purchase of goods or services from a charity
- loans of property, use of a timeshare, or lease of premises
- gifts of services
- gifts of promises
- donations in exchange for advertising or sponsorship
- a gift in kind if the FMV can’t be determined
- payment of membership fees (if advantage/entitlement exceeds the 80% threshold), and
- a donation for which the FMV of the advantage or consideration provided exceeds 80% of the value of the donation
Slide 33 – Information that must appear on official donation receipts (ex. cash gift no advantage)
Dylan: We’ve spent a lot of time talking about what you can and cannot issue a donation receipt for. Let’s now look at the kind of information that must be included on an official donation receipt. This is only one example of the four types of receipts available on our website at canada.ca/charities-giving.
We’ll post the link in the Q&A for your reference [/content/canadasite/en/revenue-agency/services/charities-giving/charities/sample-official-donation-receipts.html]
The authorized signature on the donation receipt can be anyone that the charity designates. We recommend that you limit the number of signatures, but it doesn’t matter who the signer is. Here’s a list of the information that should be included on an official donation receipt:
- a statement that it is an official receipt for income tax purposes
- The charity’s name and address
- The charity's registration number – and please note, that other qualified donees do not have a registration number, so they will not include this
- The serial number of the receipt
- The location where the receipt was issued
- The date that the donation was received
- The date that the receipt was issued
- The donor’s first and last name, with middle initial
- The donor’s address
- The amount of the gift
- The value and description of advantages received
- The eligible amount of the gift
- signature of the individual authorized by the charity to acknowledge donations, and, the name and website of the Canada Revenue Agency
[Official donation receipt for income tax purposes]
Slide 34 – Information that must appear on official donation receipts (ex. non-cash gift with advantage)
Dylan: And, for non-cash gifts, the following information should also be included:
- date of when the gift was received (if not already shown)
- brief description of the gift
- name and address of the appraiser (if property was appraised), and
- the amount of the gift is the FMV (or if it applies, the deemed FMV)
[Official donation receipt for income tax purposes]
Slide 35 – Extension of the deadline for making 2024 charitable donations
Dylan: Before we go, we did want to take a moment to address the Extension of the deadline for making 2024 charitable donations.
As you may have heard, on December 30, 2024, the federal government announced its intention to amend the Income Tax Act to extend the deadline for making charitable donations eligible for tax support in the 2024 tax year. Since then, the Department of Finance released draft legislation in support of this proposed change, which will be introduced in Parliament in due course.
In summary, the proposed legislation offers donors the option to claim or deduct certain charitable donations made up to February 28, 2025, on their 2024 income tax return. Specifically, donations of cash, or transferred by way of cheque, credit card, money order, or electronic payment. But what does it mean for charities?
First, you should know that there is no requirement in the Income Tax Act for a registered charity or other qualified donee to issue an official donation receipt or that it issue a receipt within a certain timeframe. However, if your organization chooses to do so, it should continue to issue official donation receipts according to the receipting rules that we covered in this presentation.
Second, the extension will not affect how your charity reports tax-receipted revenue on its 2024 and 2025 T3010 Registered Charity Information Return. All official donation receipts issued during your charity's 2025 fiscal period should be reported on its 2025 T3010 information return.
Third, as you do for all donations, we encourage you to maintain detailed and organized records of your activities. While not mandatory, it is a good practice to keep all postmarked envelopes of donations received by mail. You should consider documenting which receipts were issued during the extension period. These records can help you respond to enquiries from donors or the CRA.
And lastly, remember the receipting rules still apply for determining the date of donation: For in-person donation or electronic transactions, the date of donation is the date the qualified donee receives the gift. For donations sent by mail, we consider the date of the postmark on the envelope as the date of donation. The qualified donee should keep the stamped envelope as part of its books and records.
Slide 36 – Contact us
Dylan: And lastly, here is the number to reach our client service representatives, dedicated to charities: 1-800-267-2384. There, you can speak directly to one of our representatives. They are available to help you Monday through Friday, from 8 a.m. to 5 p.m. Eastern time.
Thank you so much for attending today’s webinar. We hope we were able to answer your questions.
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Thank you.
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