If our registered charity has a fundraising event where door prizes are included with tickets, can we issue official donation receipts? If so, for how much?
Short answer
It depends.
To find out the amount of the official donation receipt, if any, your charity must
- determine if there was an advantage
If yes,
- ensure that the advantage does not exceed the intention to make a gift threshold
- determine whether the advantage exceeds the de minimis threshold
- subtract the fair market value of the advantage from the fair market value of the donation
Example
A registered charity holds a fundraiser golf tournament and sells 100 tickets.
- Essential elements:
Ticket price $300 Green fees $75 Cart rental $25 Food and beverage $50 Door prize total value $3,500 = $35 average per participant
- What is the fair market value of the donation? $300.00
- Is there an advantage? Yes, door prizes, golf balls, green fees, the cart rental, and the food and beverages
- At first glance, what is the fair market value of the advantage?
- door prizes, averaging $35 per participant
- green fees, cart rental, food and beverage valued at $150
- Are the prizes and complementary items de minimis? Should they therefore be excluded in the calculation of the advantage?
- Door prizes: $35 per person
- Total advantage for the purposes of de minimis rule = $35
- Total property transferred is $300 (ticket price): de minimis threshold is the lesser of 10 per cent of $300 ($30) or $75, so it is $30
- $35 advantage exceeds $30 de minimis threshold
- The door prizes are not de minimis and the amount must be included as an advantage
- Items that are part of the purpose of the event, in this case the green fees, the cart rental, and the food and beverages are not included in the de minimis calculation.
- But does it meet the intention to make a gift threshold? Yes.
- Does the amount of the advantage received by the donor exceed 80 per cent of fair market value of total property transferred?
- Total property transferred = $300 ticket price
- Intent to give threshold = $300 x 80% = $240
- Amount of advantage =
$150 (green fees, cart rental, food and beverage)
+$35 (prizes)
$185 (total advantage)
- An official donation receipt can be issued with an eligible amount of $115
$300 (fair market value of donation)
– $185 (fair market value of advantages)
$115 (eligible amount)
More…
For more detail on golf tournaments, see
If our registered charity has a fundraising event where tickets are sold at a price higher than the fair market value of a similar event, can we issue receipts? If so, for how much?
Short answer
Maybe. If there is clear evidence that the ticket price is sufficiently in excess of the usual or comparable ticket price, this means that there may be an eligible amount for donation. To determine the eligible amount for an official donation receipt, your charity has to apply the intention to make a gift threshold and the de minimis threshold for the advantage received. If the amount of the advantage is not de minimis—that is, more than the guideline—and is less than 80 per cent of the actual ticket price, you may issue an official donation receipt for the difference. The example illustrates the calculation.
If there is no reasonably comparable event, then no part of the ticket price can be considered as an eligible amount for donation.
Example
- Tickets are sold for $200 each to a fundraising concert featuring a well-known performer;
- Each participant receives a T-shirt that normally sells for $20 and a CD that retails at $15;
- The same performer had put on a similar (and non-fundraising) concert six months earlier and the ticket price was $100;
Calculations
The total value of the complementary items is $35. Since $35 exceeds the lesser of 10 per cent of $200 ($20) and $75, it is not de minimis. Accordingly, the complementary items are regarded as an advantage and must be taken into account in determining the eligible amount for donation.
- Actual ticket price $200 less comparable non-charity ticket price of $100 and advantage of $35 ($200 – $135) brings the eligible amount for a receipt to $65.
- Since the amount of the advantage ($135) does not exceed 80 per cent of the actual ticket price (80% x 200 = $160), a tax receipt for the donation may be issued for $65.
Will the attendance of a celebrity at our fundraising event affect the donation amount on the tax receipts?
Short answer
No. The mere attendance of celebrities at fundraising events is not viewed as an advantage. So it will not be included in the calculation of the amount on your official donation receipt.
Long answer
While the mere attendance of a celebrity at an event does not change how the event should be receipted, where an additional incremental amount is paid for the right to participate in an activity with a particular individual, this payment is not treated as a gift. For example, at a golf tournament, if a supporter pays extra so he or she can play a round with a well-known sports figure, that is an advantage that must be taken into account in any official donation receipt provided to the supporter. If the celebrity is merely attending the event along with the supporter, this will not have an impact on the amount of the supporter’s official donation receipt.
Our registered charity sold lottery tickets. Can we issue donation receipts for the ticket and if so, for how much?
Short answer
No. A gift requires an intention to make a gift.
Long answer
Participants in lotteries, while perhaps influenced by the identity of your charity, are mainly motivated by the chance to win prizes. In some cases, while there may be an element of an intention to make a gift, the advantage cannot be reasonably quantified. Therefore, no part of the cost of a lottery or raffle ticket is a gift that may be receipted for income tax purposes.
Is the amount paid for a raffle ticket a “gift” and, if so, what is the amount on the receipt?
Short answer
It depends.
Long answer
If participation in the raffle is included in the participation fee of a fundraising event such as a banquet, the prizes will be treated as door prizes and the value of the various prizes to be won is included in determining the amount of the advantage.
Where the raffle is conducted separately, the cost of raffle tickets is not considered a gift (as it is essentially a lottery) and the value of the various prizes is not taken into account in determining the amount of the advantage.
Can property donated for sale at an auction be considered a gift?
Short answer
Yes. In order for there to be a gift for the purposes of the Income Tax Act, there must be a voluntary transfer of property to the charity. How a charity uses donated property is generally not relevant in determining whether the donor has made a gift to the charity.
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.
Can our charity issue an official donation receipt to the donor for the appraised value of donated goods if they are sold at auction for less than this amount?
Short Answer
Yes
Long Answer
To the extent that the appraised value accurately reflects the fair market value of the property at the time it is donated to your charity, an official donation receipt in the amount of the appraised value may be issued to the donor. The accepted price at auction is not a factor in determining the fair market value of the gift.
Can an individual who purchases a service at an auction be entitled to a donation receipt for the amount paid that is more than the value of the service received?
Short answer
Yes. Where the service has a clearly established fair market value that has been identified to all bidders at the auction before the opening bid, an official donation receipt can be issued to the purchaser of the service for the “eligible amount” where there is an intention to make a gift.
Long answer
The eligible amount is the difference between the amount paid (bid amount) and the amount of advantage received (that is, the value of the service). For example, if an individual successfully bid $40 for a haircut valued at $25, the eligible amount would be $15.
A business bought a block of tickets for our golf tournament with money collected from its employees. Should we issue the tax receipt in the name of the golfers who use the tickets or in the name of the business?
Short answer
The charity should always issue a receipt in the name of whomever buys or paid for the tickets. The receipt cannot be issued in the name of the business since the employees paid for the tickets.
Long answer
If the business provides the charity with the list of golfers who paid for the tickets, the charity can issue a receipt in the name of each golfer.
Can a receipt be issued to participants in a fundraising golf tournament?
Short answer
Yes, if the price of the ticket to participate in the golf tournament is more than the cost of playing. The amount on the tax receipt is based on the value of the advantage and the de minimis threshold.
Long answer
Calculation of the amount of receipts for an event such as a golf tournament can be complex, and charities undertaking this type of fundraising should familiarize themselves with the factors that can have an impact on the amount of the receipt.
For more information on this topic, see FAQ S28 and
An organization that is not a registered charity asked to use our registered charity registration number for their fundraising event. Can we do this?
Short answer
No. Under no circumstances should a registered charity lend its registration number to another organization for receipting purposes. You—the registered charity—are responsible for all tax receipts issued under your name and number and must account for the corresponding donations on your annual information return. If you lend your registration number, you could lose your charitable registration.