What is an “official” donation receipt?
An official donation receipt is a receipt issued by charities that are registered with the Canada Revenue Agency’s Charities Directorate and by other qualified donees for gifts received.
Certain details need to be included on an official donation receipt. See the question: “What information should we include on an official donation receipt?” in our Format and Required Information FAQs
Who are qualified donees?
Under the Income Tax Act, qualified donees are organizations that can issue official donation receipts for gifts that individuals and corporations make to them.
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
Who can issue official donation receipts?
All qualified donees may issue official donation receipts for gifts received from individuals and corporations.
Under the Income Tax Act, however, there is no requirement that a registered charity issue receipts for gifts received.
Our charity was officially registered on March 1, 2008. When can we start issuing official donation receipts?
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.
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.
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.
What does our charity need to know before we issue an official donation receipt?
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?
Does our charity always have to issue official donation receipts for donations?
No. Under the Income Tax Act, a registered charity is not required to issue receipts for gifts received.
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.
How does our charity determine whether to issue official donation receipts?
Generally, the main consideration is cost.
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.
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).
For any given calendar year, when must our charity complete all receipting?
The Canada Revenue Agency suggests that charities issue receipts to donors no later than February 28 of the year following the date of donation, which allows donors to claim the deduction on their tax return.
Our charity received a gift from another registered charity. Should we issue an official donation receipt to the other charity?
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.
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.
My charity is hiring a third party to organize a fundraiser. Can that third party issue the official donation receipts?
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
For more on third-party fundraisers, see Third-party fundraisers for the benefit of a particular registered charity – Policy Commentary .