Auctions

General information and example

  • Receipting for items donated for an auction:
    • A receipt can be issued to the donor for the fair market value of the item at the time it is donated to the charity.
    • The donated item may be subject to the deemed fair market value rule.
    • If the fair market value of the donated item cannot be established, you cannot issue a receipt.
       
  • Receipting for items bought at an auction:
    • The fair market value of the item must be established and made known to all bidders in advance of the auction, or you cannot issue a receipt.
    • The winning bid must meet the intention to make a gift threshold (the posted value of the item cannot exceed 80% of the winning bid).

Tip 

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.

Questions and answers

  • Can receipts be issued for items donated for sale at an auction?

    Yes. However, the fair market value of the item must be determined before a receipt can be issued. Keep in mind that gifts of services cannot be receipted. For more information, go to Gifts of services.

  • Can a charity issue a receipt for a hockey jersey signed by an NHL player?
    Yes. If the charity can determine the fair market value of the jersey when it is donated, it can issue a receipt. If the charity is not able to determine the fair market value, a receipt cannot be issued. See Determining fair market value of non-cash gifts.
  • Can a charity issue a receipt to the donor for the appraised value of a donated item if the item is sold at the auction for less?

    Yes. The charity may issue a receipt to the donor for the appraised value of the donated item even if the item is sold for less at the auction.

  • If a business owner donates a gift certificate to a charity for the purchase of goods and services from his business, can the charity issue a receipt to the business (the issuer)?

    No. When the issuer donates a gift certificate directly to a charity, there has not been a valid transfer of property. As a result, the issuer is not entitled to a receipt at the time the donation is made. The issuer may be eligible for a receipt if the charity redeems the certificate for property. For more information, see Guidance CG-007, Donation of gift certificates or gift cards.

  • Does it make a difference for receipting purposes if the auction is a silent auction?

    No. It does not make a difference.

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