In the context of charitable giving and taxation, a loanback occurs when a donor makes a gift to a qualified donee and within 60 months of making the gift, at least one of the following two situations occur. These situations have the effect of reducing the fair market value of the gift for income tax purposes.

Situation one:

  • the qualified donee holds a non-qualifying security of the donor that it acquired after the time that is 60 months before the gift was made

Situation two:

  • the donor (or a person or partnership not dealing at arm's length with the donor) uses the qualified donee's property under an agreement that was made or modified after the time that is 60 months before the gift was made
  • the property was not used by the qualified donee in its charitable activities


Separate rules may also apply to reduce the eligible amount of the gift where an advantage is received in respect of a gift.
These are complex provisions. If necessary, we recommend obtaining advice from legal or accounting experts.

How is the value of the gift affected?

When the loanback provisions apply, the qualified donee that receives the gift should reduce the amount that would otherwise be reported on the official receipt that it may issue, according to the two possible situations as follows:

Situation one:

  • the fair market value of the gift is reduced by the fair market value of the consideration given by the qualified donee for the non-qualifying security

Situation two:

  • the fair market value of the gift is reduced by the fair market value of the qualified donee's property that was used

When the loanback provisions take effect after the qualified donee issues a receipt for income tax purposes, the qualified donee should issue a revised receipt to reflect the fair market value as adjusted by the provisions described above. The revised receipt must contain all the required information plus a notation stating that it "cancels and replaces receipt #" (insert the serial number of the previous receipt, which should be marked "cancelled").

The qualified donee's copy of the previous receipt must be kept in the usual manner. A copy of the amended receipt should also be sent to the donor. The donor should then, where necessary, file an adjustment request with the Canada Revenue Agency to amend any return that they have already filed based on the previous receipt.


If the gift is a non-qualifying security, the gift must be an excepted gift before the loanback rules apply. Otherwise, the rules relating to a donation of a non-qualifying security apply. For more information, see Non-qualifying securities.

A non-qualifying security is considered to be an excepted gift if it meets all of the following criteria:

  • it is a share
  • the qualified donee that receives the non-qualifying security is not a private foundation
  • the donor deals at arm's length with the qualified donee
  • the donor deals at arm's length with each of the qualified donee's directors, trustees, officers, and like officials


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