Expenses incurred by volunteers

Policy commentary

Release date
February 26, 2003

Reference number
CPC-025

Subject

Gift - Expenses - Volunteer - Whether expenses incurred by a volunteer on behalf of a registered charity qualify as a gift

Purpose

To clarify the Directorate's policy regarding expenses incurred by volunteers on behalf of a registered charity.

Definitions

Amount of advantage: The total value of all property, services, compensation or other benefits to which the donor of a property, or a person not dealing at arm's length with the donor, is entitled as partial consideration for, or in gratitude for, the gift.

Intention to give: The amount of the advantage that accrues to the donor does not exceed 80% of the fair market value of the property transferred.

Eligible amount of gift: The amount by which the fair market value of the property that is the subject of the gift exceeds the amount of the advantage, if any, in respect of a gift.

Commentary

1. To qualify as a gift for purposes of the Income Tax Act, there must be a voluntary transfer of property to a donee with a clearly ascertainable value, any advantage received or obtained by the donor in respect of the transfer must be clearly identified and its value ascertainable and there must be a clear intent to enrich the donee.

2. In the case of expenses incurred by volunteers on behalf of registered charities, the facts of each case will determine whether they qualify as a gift.

3. To determine whether there is a gift, certain factors are taken into consideration, including: 

• whether the expenses are incurred voluntarily or whether the volunteer was compelled to assume them

For example, prior to agreeing to work on behalf of a charity, the individual voluntarily agrees to incur the hardships and costs associated with the work. The payment of the expenses would not constitute a gift if the volunteer is somehow compelled to assume them.

• whether the consideration accruing to the volunteer negates donative intent (that is, intention to give)

For example, where a volunteer agrees to assume travel costs to work abroad for the charity, and then takes the opportunity to take a three-week vacation at the end or beginning of the work term. This may be acceptable where the volunteer has worked abroad for several months. However, if the volunteer only works a few days and receives a substantial rebate on travel costs as a result of travel arrangements made through the charity, it is likely that the amount of the advantage that accrues back to the volunteer would negate donative intent.

• whether the amenities that are being provided to the volunteer that works for the charity are reasonable, are provided in the context of the work with the charity, and are priced at market rates or lower

For example, a missionary agrees to travel abroad and incurs travel expenses on behalf of a charity. Instead of being reimbursed by the charity for those expenses, the missionary wishes to gift the amount of his/her airfare and accommodations to the charity. The travel arrangements include a return ticket at the economy rate and accommodations at a bed and breakfast for two weeks. Since the amenities provided to the volunteer are reasonable and the purpose of the travel relates to the charity's work, the amount donated to the charity to cover the travel expenses can be considered as a gift to the charity and therefore, receiptable.

References

• Guidance CG-002, Canadian registered charities carrying on activities outside Canada
• Income Tax Act, R.S.C. 1985 (5th supp.) c. 1, ss. 248(30), (31) and (32)

• S7-F1-C1, Split-receipting and Deemed Fair Market Value