S34. Can a successful bidder at an auction receive a tax receipt for donation for the amount in excess of the fair market value that he or she pays?

S34. Can a successful bidder at an auction receive a tax receipt for donation for the amount in excess of the fair market value that he or she pays?


Short answer

Yes. As long as these requirements are met:

  • the value of the item can be determined and
  • the value was posted before the start of the auction
  • the value of the advantage does not exceed the intention to make a gift threshold, that is, 80 per cent of the price paid
  • the value of the advantage does exceed the de minimis threshold

Example

A sports store donates a mountain bike to a charity and that charity puts it up for auction. The fair market value of the bike is $400 and this amount is posted with the item. There is a successful bid of $600.

    To determine the amount of the official donation receipt  
    Bid price $600
    There is an advantage, that is, the value of the bike for $400 ($400)
    Yes, it meets the intention to make a gift threshold:  
    80 per cent of the bid price, which is $480
     
    The value of the advantage is less than 80 per cent of the bid price
     
    Yes, it meets the de minimis threshold, that is 10 per cent of the bid price or $75, whichever is less  

    The threshold is $60 (10 per cent of $600).

     
    The value of the advantage exceeds the de minimis threshold
     
    Excess of the bid price over the value of the advantage (the bike) $200

     

    An official donation receipt can be issued for $200.
     

    The sports store donating the bike will be entitled to receive a tax receipt for $400. If this represents a gift on the part of the retailer, the retailer will have revenue of $400 pursuant to section 69 and a donation deduction of $400. If the bike cost the retailer $250, the result would be a profit of $150 for tax purposes.

Exception

The Canada Revenue Agency has indicated that, with respect to certain personal items such as the jersey of a hockey player or the right to play golf or dine with a particular person, the value will be the amount of the bid. No donation tax receipt is, therefore, to be issued.