Receipting - The Basics

Receipting - The Basics

This section of Frequently Asked Questions covers The Basics about issuing proper tax donation receipts such as: what are official donation receipts and who can issue them? / what information should be included on an official donation receipt / and how to handle receipting mistakes.  There are twenty questions divided into three sections:

  1. General Information about Receipts

  2. Format and Required Information

  3. Improper Receipting

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General Information About Receipts

R1. What is an "official" donation receipt?

R1. What is an "official" donation receipt?


Short Answer

An official donation receipt is a receipt issued by charities, and other qualified donees, that are registered with the Canada Revenue Agency’s Charities Directorate, for gifts received.

More…

Certain details need to be included on an official donation receipt.
See Receipting: The Basics FAQ R5

R2. Who can issue official donation receipts?

R2. Who can issue official donation receipts?


Short answer

All qualified donees may issue official donation receipts for gifts received from individuals and corporations.

More…

Under the Income Tax Act, however, there is no requirement that a registered charity issue receipts for gifts received.

R3. Who are qualified donees?

R3. Who are qualified donees?


Short answer

Under the Income Tax Act, qualified donees are organizations that can issue official donation receipts for gifts that individuals and corporations make to them.

Examples

Qualified donees include

  • registered charities;
  • registered Canadian amateur athletic associations;
  • registered national arts service organizations;
  • housing corporations in Canada set up exclusively to provide low-cost housing for the aged;
  • municipalities in Canada;
  • under proposed legislation, for gifts made after May 8, 2000, municipal or public bodies performing a function of government in Canada;
  • the United Nations and its agencies;
  • universities outside Canada with a student body that ordinarily includes students from Canada;
  • charitable organizations outside Canada to which the government of Canada has made a gift during the donor’s taxation year or in the 12 months immediately before that period;
  • the government of Canada, a province, or territory;

R4. Our charity was officially registered on March 1, 2008. When can we start issuing official donation receipts?

R4. Our charity was officially registered on March 1, 2008. When can we start issuing official donation receipts?


Short answer

It depends on the kind of gift. Your charity can issue receipts for gifts-in-kind as of your effective date of registration. In the case of cash gifts, you can issue receipts as of the year of registration. (CPC 009)

Example

As stated, your organization’s effective date of registration is March 1, 2008. If you received a gift-in-kind on January 12, 2008, a receipt cannot be issued for the gift, since it was received prior to your effective date of registration. If the gift were a cash donation, you would be able to issue an official receipt as of January 1, 2008.

Long Answer

On the official donation receipt, your charity must enter the date on which the gift was received. A registered charity cannot issue an official donation receipt for a gift-in-kind received prior to its effective date of registration.

R5. What does our charity need to know before we issue an official donation receipt?

R5. What does our charity need to know before we issue an official donation receipt?


Short answer

You need to know the following:

  • Is this gift eligible for a tax receipt?
    • If so, what is the fair market value of the property transferred?

  • Has the donor received something in return for the gift? This is known as an "advantage".
    • If so, what is the eligible amount to be receipted?

R6. Does our charity always have to issue official donation receipts for donations?

R6. Does our charity always have to issue official donation receipts for donations?


Short answer

No. Under the Income Tax Act, a registered charity is not required to issue receipts for gifts received.

Long answer

Remember that donors cannot claim a charitable tax credit or deduction unless they have an official donation receipt. Therefore, if your charity does not issue receipts, you should let potential donors know.

Similarly, if your charity only sometimes issues receipts, you should let potential donors know of the circumstances in which you will and will not issue a receipt.

R7. How does our charity determine whether to issue official donation receipts?

R7. How does our charity determine whether to issue official donation receipts?


Short answer

Generally, the main consideration is cost.

Long answer

Receipting carries with it a certain administrative burden and receipted donations increase a registered charity’s spending obligation. Therefore, your charity may choose to issue receipts according to certain criteria or you may choose not to issue receipts at all. Either way, in the interests of good public relations, your policy should be communicated to your donors.

Examples

Some registered charities set minimum donation thresholds for receipting (for example, receipts are given for donations of $20 and over). Others do not provide receipts during certain fundraising events (for example, a garage sale or penny carnival).

R8. For any given calendar year, when must our charity complete all receipting?

R8. Pour une année d’imposition donnée, à quel moment notre organisme de bienfaisance doit-il effectuer la délivrance de tous ses reçus?


Réponse courte

L’Agence du revenu du Canada suggère que les organismes de bienfaisance délivrent les reçus aux donateurs au plus tard le 28 février de l’année suivant la date du don, ce qui permet aux donateurs de demander la déduction dans leur déclaration de revenus.

R9. Our charity received a gift from another registered charity. Should we issue an official donation receipt to the other charity?

R9. Our charity received a gift from another registered charity. Should we issue an official donation receipt to the other charity?


Short answer

No, you should not issue official donation receipts to other charities. Charities do not pay taxes, therefore do not need an official donation receipt. You do need to give your charity registration number to the other charity for its reporting requirements.

Long answer

In cases where a donation is received from a charity, a normal business receipt is sufficient to acknowledge the gift.

Business receipts are also used in the case of acknowledging other transactions that are not eligible for an official donation receipt, such as sponsorship where there has been a clear advantage to the business.

Registered charities must keep track of gifts received from other registered charities as these amounts are required to calculate the disbursement quota.

For more information see: www.cra-arc.gc.ca/chrts-gvng/chrts/prtng/gfts/rgstrd-chrts-eng.html

R10. My charity is hiring a third party to organize a fundraiser. Can that third party issue the official donation receipts?

R10. My charity is hiring a third party to organize a fundraiser. Can that third party issue the official donation receipts?


Short answer

No.

Long answer

Although a registered charity can enroll a third party organization or retain a fundraiser to organize a fundraising event, the position of the Canada Revenue Agency (CRA) is that the charity should maintain control over all monies that are earned as part of the event and over the receipts that are issued.

In addition, if the charity does not run the event by itself, through its own employees or volunteers, it should put in place a written agreement setting out the fundraising arrangements and ensuring that all fundraising and receipting rules are adhered to.

Lastly, charities should be aware before entering such arrangements of CRA’s policy on fundraising. Read up on it at Fundraising by Registered Charities

More

For more on third-party fundraisers, see Third-party fundraisers for the benefit of a particular registered charity - Policy Commentary .

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Format & Required Information

R11. What information should we include on an official donation receipt?

R11. What information should we include on an official donation receipt?


Short answer

An official donation receipt must include, in a manner that cannot be readily altered, at least the following information:

  • a statement saying that it is an official receipt for income tax purposes;
  • the charity’s BN (Business Registration Number), name, and address in Canada as recorded with the Canada Revenue Agency;
  • the serial number of the receipt;
  • the place or locality where the receipt was issued;
  • if it is a cash donation, the day and year on which the charity received the donation;
  • if the donation is a gift other than cash, that is, a gift in kind,;
    • the day on which the charity received the donation;
    • a brief description of the gift;
      and
    • the name and address of the appraiser of the property, if an appraisal was &nbsp completed;
  • the day on which the charity issued the receipt, if that day differs from the date on which the charity received the donation;
  • the full name (including middle initial) and address of the donor;
  • the amount of a cash donation, or if the donation is a gift other than cash, the amount that is the fair market value of the gift at the time it was made or deemed fair market value, if that rule applies;
  • value and description of any advantage received by the donor;
  • eligible amount of gift;
  • signature of an individual authorized by the charity to acknowledge donations;
  • name and website address of the Canada Revenue Agency www.cra.gc.ca/charities.
Long answer

In preparing official donation receipts, a registered charity must indicate the year in which it actually received the gift. If a gift is dated, mailed, and postmarked in one year and received in the next year, the charity can issue a receipt indicating the year appearing on the postmark as the date it received the gift. A charity may not, however, issue a receipt until it has actually received the gift.

A charity must keep on file a copy of all official receipts that it issues. In general, a charity must keep copies of receipts for two calendar years after the end of the calendar year to which the receipt applies.

Exceptions

If the charity operates in Quebec or has accepted a gift from a donor resident in Quebec, it can issue two official donation receipts for a single gift provided they contain identical information. That is, both receipts must have the same serial number; the additional receipt is required for Quebec income tax returns. When it is not possible for a registered charity outside of Quebec to issue a second receipt that bears the same serial number, the charity can advise donors that it is acceptable to submit a photocopy of the original receipt when filing their Quebec income tax return.

More…

See FAQ R12 – Sample Receipts.

R12. What does an official receipt look like?


R12. What does an official donation receipt look like?


Sample Donation Receipts - Word Document

Sample #1 - Cash gift (no advantage)

Official Donation Receipt For Income Tax Purposes

Receipt # 0001


Charity Name Canadian Address Charity BN/Registration #

 


Date donation received: _______________

Donated by: _____________________________
(First name, initial, last name)
Address: _____________________________



Eligible amount of gift for tax purposes: ______________________________


Date receipt issued:_____________________________

Location issued: _______________________________

Authorized signature: ____________________________


For information on all registered charities in Canada under the Income Tax Act
please visit:
Canada Revenue Agency www.cra.gc.ca/charities




Sample #2 - Cash Gift (with advantage)

Official Donation Receipt For Income Tax Purposes

Receipt # 0001


Charity Name Canadian Address Charity BN/Registration #

 


Date donation received: _______________

Donated by: _____________________________
(First name, initial, last name)
Address: _____________________________



Total amount of cash received by charity =

________________ A
Value of advantage =
(cash / fair market value of property or services)
________________ B
Eligible amount of gift for tax purposes =
(line A minus line B)
________________ C

 

Date receipt issued:_____________________________

Location issued: _______________________________

Authorized signature: ____________________________



For information on all registered charities in Canada under the Income Tax Act
please visit:
Canada Revenue Agency www.cra.gc.ca/charities





Sample #3 - Non-Cash Gift (no advantage)

Official Donation Receipt For Income Tax Purposes

Receipt # 0001


Charity Name Canadian Address Charity BN/Registration #

 

Date donation received: _______________

Donated by: _____________________________
(First name, initial, last name)
Address: _____________________________



Eligible amount of gift for tax purposes: ______________________________
(fair market value of property)

 

Description of property received by charity: ______________________________

Appraised by: ______________________________

Address of appraiser: ______________________________



Date receipt issued:_____________________________

Location issued: _______________________________

Authorized signature: ____________________________


For information on all registered charities in Canada under the Income Tax Act
please visit:
Canada Revenue Agency www.cra.gc.ca/charities





Sample #4 - Non-Cash Gift (with advantage)

Official Donation Receipt For Income Tax Purposes

Receipt # 0001


Charity Name Canadian Address Charity BN/Registration #

 


Date donation received: _______________

Donated by: _____________________________
(First name, initial, last name)
Address: _____________________________



Total amount of non-cash received by charity=

________________ A
Value of advantage =
(cash / fair market value of property or services)
________________ B
Eligible amount of gift for tax purposes =
(line A minus line B)
________________ C

 

Description of property received by charity: ______________________________

Appraised by: ______________________________

Address of appraiser: ______________________________



Date receipt issued:_____________________________

Location issued: _______________________________

Authorized signature: ____________________________


For information on all registered charities in Canada under the Income Tax Act
please visit:
Canada Revenue Agency www.cra.gc.ca/charities


R13. Can receipts have a facsimile signature?

R13. Can receipts have a facsimile signature?


Short answer

Yes, under certain circumstances.

Receipts can have a facsimile signature if they are:

  • imprinted distinctly—usually by a commercial printer—with the name, address, and BN/registration number of the charity;

    and

  • serially numbered by a printing press or numbering machine;

All unused receipt forms must be kept at the charity’s Canadian address, as recorded with the Canada Revenue Agency.

R14. Can our charity issue computer-generated receipts?

R14. Can our charity issue computer-generated receipts?


Short answer

Yes, your charity can issue electronic official donation receipts as long as they contain all of the required elements (see FAQ R12), are readable, and the data is sufficiently protected from unauthorized access. If your charity fails to adequately safeguard and maintain records in a readable and reliable manner, you could be considered to have failed to meet the legal requirement to keep adequate books and records.

Long answer

To protect computer-generated receipts from unauthorized access, registered charities should ensure that:

  • the computer system used to store the receipts is password-protected and restricts entry to and modification of donor contribution records;
  • donor records are stored on non-erasable media, such as CD-ROMs or printouts,
    and
  • hard copies of issued receipts can be printed on request;

A computer-stored copy of an official donation receipt, known as a “soft copy,” will be considered a duplicate for purposes of the Income Tax Act if the following conditions are met:

  • it contains all the necessary information required on the contents of receipts as described above;
    and
  • a charity can, at any time, print a copy of the receipt without inputting any new data required on receipts;

To be considered a duplicate, the computer-stored copy does not have to carry an electronic signature.

R15. Can our charity send official donation receipts by e-mail?

R15. Can our charity send official donation receipts by e-mail?


Short answer

Yes. Your charity, however, should take the following precautions to protect your electronic receipts:

  • receipts should be in a read only or non-editable format;
  • receipts should be protected from hackers through the use of appropriate software;
  • the document should be encrypted and signed with an electronic signature;
  • the use of a secure electronic signature should be kept under the control of a responsible individual authorized by the charity;
    and
  • copies of e-mail issued receipts must be retained by the charity;

Improper Receipting

R16. What if our stock of official donation receipts has a mistake? Can we use corrected printed receipts, and, if so, how do we make the correction?

R16. What if our stock of official donation receipts has a mistake? Can we use corrected printed receipts, and, if so, how do we make the correction?


Short answer

Your charity can use a stamp that clearly shows a change of name, address, or BN/Registration number if it wants to use its remaining stock of official donation receipts before ordering a new supply.

Also, your charity must make sure that the incorrect information is crossed out, either by the stamp or by hand.

R17. How can our charity replace a lost or spoiled receipt?

R17. How can our charity replace a lost or spoiled receipt?


Short answer

To replace a lost receipt, your charity can issue a replacement that must contain all required information plus the serial number of the lost receipt. The replacement receipt should also state that it “cancels and replaces the lost receipt.” Your copy of the lost receipt must be retained and marked “cancelled.”

In the case of a spoiled receipt, your charity can issue a new receipt, but must keep both the donor’s and charity’s original copies, marked “cancelled.”

R18. What steps should a registered charity take when it issues a receipt with an incorrect amount?

R18. What steps should a registered charity take when it issues a receipt with an incorrect amount?

CRA has indicated that the following four (4) point course of action is acceptable:

  • A replacement tax donation receipt with covering letter explaining the change and reason for the error (eg. error in determining FMV) should be issued to the donor in the correct amount.

  • A copy of the previously issued receipt for XXX, marked “cancelled” should be provided to the donor with instructions that the donor would need to re-file for the XXXX taxation year, if the receipt in question were then claimed by the donor.

  • A copy of the letter to the donor, together with the cancelled original charitable receipt and revised charitable receipt should be copied to the Charities Directorate, along with the full particulars or the name and address of the donor.

  • A copy of the cancelled receipt and the newly issued receipt should be kept in the records of the charity and the charity should file a revised annual information return, form T3010, for the year XXXX, to reflect the changes in the receipts issued.

Source: Policies and Technical Information – Information Letter CIL 2001-023

R19. What is the penalty for issuing receipts with false information?

R19. What is the penalty for issuing receipts with false information?


Short answer

A registered charity that issues an official donation receipt with incorrect or incomplete information can be subject to a penalty of five per cent of the eligible amount stated on the receipt. This penalty increases to 10 per cent if the violation is repeated within five years. A registered charity that issues an official donation receipt that includes deliberately false information is liable to a penalty equal to 125 per cent of the eligible amount stated on the receipt.

Long answer

If a charity is subject to more than $25,000 in penalties for having issued false receipts, that charity may have its charitable status suspended for one year.

A registered charity that disregards or continues to disregard the receipting requirements of the Income Tax Act could also have its registration revoked.

R20. Is there anything else that our charity should know about false receipting?

R20. Is there anything else that our charity should know about false receipting?


Long answer

The Canada Revenue Agency (CRA) has a growing concern regarding false receipts discovered when auditing individual’s income tax returns. Some of the false receipts have been produced by the charities themselves; some have been created by others without the charity even being aware of the scheme.

Charities should take the utmost care to protect and ensure the integrity of their official income tax receipts. Not only is it important to keep proper books and records of all donations so that accurate receipts can be issued, but also so that amounts can be verified if reviewed or audited by the CRA.

It is equally important to maintain adequate internal controls to restrict access to the receipts and related software programs:

  • All blank receipts should be kept in a fireproof safe;
    or
  • at a minimum, under lock and key in a secure storage room.
  • Computer programs should be password protected with access restricted to those who are responsible for issuing the receipts.

Your charity may receive a request from the CRA asking for the donor’s name and the amount on a particular receipt by number. This is one way they determine if a taxpayer’s receipt is valid.