Auctions

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General information and example

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The charity can calculate the minimum bid that is required to meet the intention to make a gift threshold by multiplying the fair market value of the item by 125%.

Example 

A bike is donated to a charity for an auction

  • The fair market value of the bike at the time of donation is $400
  • The fair market value of the bike is posted at the auction
  • The winning bid for the bike at the auction is $550

Calculation of eligible amount

Winning bid (the gift)                                         $550 
Less advantage:          Bike $400
Total advantage                                                $400 
Eligible amount                                                 $150 

The amount of the advantage is $400 and a receipt may be issued to the winning bidder for the eligible amount of $150.

The fair market value of $400 for the bike was established at the time it was donated, and a receipt may be issued to the donor for $400.

If the fair market value of the bike was not made known to bidders in advance of the auction, a receipt could not be issued to the winning bidder.

The minimum bid required to meet the intention to give threshold is $500 (fair market value x 125%).

If the total advantage had been greater than $440 (80% of the $550 winning bid), it would not have met the intention to make a gift threshold and a receipt could not have been issued to the winning bidder.

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