Lottery prizes
How to issue a receipt
A qualified donee may issue a receipt for a donation of a prize won in a lottery as follows:
Donated three or more years after it was won in the lottery
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If a lottery prize is donated to a donee three or more years after it was won in the lottery, the donee may issue a receipt for the fair market value (FMV) of the gift at the time of donation.
Donated less than three years after it was won in the lottery
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If a lottery prize is donated to a donee less than three years after it was won in the lottery, the deemed fair market value rule applies. Under the deemed fair market value rule, the donee may issue a receipt only for the lesser of:
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the gift’s FMV at the time of donation
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its cost to the donor (the cost to the donor is equal to the FMV of the prize when it was won in the lottery)
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Example
A donor wins a lottery prize of jewellery valued at $1,000, and later donates the jewellery to a charity. Before gifting the jewellery, the donor has it appraised at $1,250. The charity would like to issue a receipt to the donor.
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FMV at time of donation $1,250
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FMV when donor won prize $1,000
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Cost to donor (FMV when donor won prize) $1,000
If the donor donates the jewellery three or more years after it was won in the lottery, the charity can issue a receipt for the FMV at the time of donation ($1,250).
If the donor donates the jewellery within three years, the charity can issue a receipt for $1,000 which is the lesser of the FMV at the time of donation ($1,250) and the cost to the donor ($1,000).
If the donor receives an advantage (for example, a meal or tickets to a show) in return for the donation, split receipting rules apply.
Note
References
- Income Tax Act, R.S.C. 1985 (5th supp.) c. 1, ss. 52(4)
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