D16. What is the general principle on receipting of donations of services?

D16. What is the general principle on receipting of donations of services?

Short answer

Contributions of services (that is, time, skills, or effort) do not qualify as gifts. At law, in order for there to be a gift, there must be a transfer of property; services do not involve such a transfer.

Long answer

A charity can, however, pay for services rendered and later accept the return of all or a portion of the payment as a gift, provided it is returned voluntarily. This is often referred to as a cheque exchange. In such a case, a charity should make sure that it keeps a copy of the invoice issued by the service provider. The invoice and cheque exchange not only ensure that the charity is receipting a gift of property, but they also create an audit trail, as the donor must account for the taxable income either as remuneration or as business income.

A charity should not issue an official donation receipt to a service provider in exchange for an invoice marked “paid”. Eoing so would raise questions about whether any payment has been transferred from the charity to the service provider and, in turn, whether any payment has been transferred back to the charity.

(Although, in some circumstances, CRA does permit a charity to issue a donation receipt to volunteers, in lieu of re-imbursing expenses incurred by the volunteer, this practice does not extend to service providers. For more information on when volunteers can receive a donation receipt, see question S30. Re-imbursed expenses are not income for a volunteer, and do not have to be reported as remuneration or business income.)


  ABC Landscaping ploughs the snow and sands the parking lot of a charity.
  • Between January and March, ABC cleans the charity's parking lot ten times.
  • Each cleaning is worth $200.
  • At the end of March, the owner of ABC says, “Just give me a donation receipt for $2,000.”
  Can the charity issue a donation receipt to ABC?
  No. The charity cannot issue a receipt. Gifts must involve a transfer of property; providing a service does not involve a transfer of property.

However, ABC could bill the charity for the $2,000. The society would pay the invoice.

If ABC subsequently gives the charity $2,000, or another amount, ABC can receive a donation receipt for that amount.


Longer answer

Sometimes the line between what constitutes a property and what constitutes a service is quite clear. If an individual or company cleans the charity’s office, the individual or company is providing a service rather than a property and this cannot be receipted as a gift in kind.

Other scenarios are less clear, either because it is not certain whether the scenario involves a service or property or whether the donor can be considered to have transferred property to a charity. For example, can a website be considered property for the purposes of making a gift? The Income Tax Rulings Directorate considers such proposed transactions on a case-by-case basis.