D9. What is an "advantage" and why is it important?
An advantage is the total value of any property, service, compensation, use, or any other benefit that a donor receives in return for his or her donation. This value must be taken into consideration when determining the eligible amount of a gift for receipting purposes. In other words, your charity must know this amount in order to issue an official donation receipt for the correct amount.
Example You donate money to your town’s opera company, which is a registered charity. In gratitude, the company provides you with three tickets to a performance that are valued in total at $150. You are therefore considered to have received an advantage of $150.
The concept of advantage is very broad. It includes the value of property, the use or enjoyment of property, services, user licences, or other benefits granted to the donor or to a person who is related to the donor.
For receipting purposes, the manner in which the advantage is handled depends on the amount in question.
- If the value of the advantage is 80 per cent or less of the fair market value of the donation, then a receipt may be issued for the difference (see split receipting).
- If the value of the advantage is greater than 80 per cent of the value of the donation, no gift is deemed to have been made and an official donation receipt cannot be issued.
- If the value of an advantage is the lesser of $75 or 10 per cent of the value of the donation, it is considered nominal (called de minimis) and it need not be deducted from the donation amount of the gift for receipting purposes.
- If the fair market value of the advantage cannot be determined, a receipt cannot be issued.