Q: How can our charity replace a lost or spoiled receipt?

To replace a lost receipt, your charity can issue a replacement that must contain all required information plus the serial number of the lost receipt. The replacement receipt should also state that it “cancels and replaces the lost receipt.” Your copy of the lost receipt must be retained and marked “cancelled.” In the case of a spoiled receipt, your charity can issue a new receipt, but must keep both the donor’s and charity’s original copies, marked “cancelled.”

Q: What is the penalty for issuing receipts with false information?

Short answer A registered charity that issues an official donation receipt with incorrect or incomplete information can be subject to a penalty of five per cent of the eligible amount stated on the receipt. This penalty increases to 10 per cent if the violation is repeated within five years. A registered charity that issues an official donation receipt that includes deliberately false information is liable to a penalty equal to 125 per cent of the eligible amount stated on the receipt. Long answer If a charity is subject to more than $25,000 in penalties for having issued false receipts, that charity may have its charitable status suspended for one year. A registered charity that disregards or continues to disregard the receipting requirements of the Income Tax Act could also have its registration revoked.

Question 1

What if our stock of official donation receipts has a mistake? Can we use corrected printed receipts, and, if so, how do we make the correction?

Accepted Answer

Your charity can use a stamp that clearly shows a change of name, address, or BN/Registration number if it wants to use its remaining stock of official donation receipts before ordering a new supply.

Also, your charity must make sure that the incorrect information is crossed out, either by the stamp or by hand.

Question 2

How can our charity replace a lost or spoiled receipt?

Accepted Answer

To replace a lost receipt, your charity can issue a replacement that must contain all required information plus the serial number of the lost receipt. The replacement receipt should also state that it “cancels and replaces the lost receipt.” Your copy of the lost receipt must be retained and marked “cancelled.”

In the case of a spoiled receipt, your charity can issue a new receipt, but must keep both the donor’s and charity’s original copies, marked “cancelled.”

Question 3

What steps should a registered charity take when it issues a receipt with an incorrect amount?

Accepted Answer

CRA has indicated that the following four (4) point course of action is acceptable:

A replacement tax donation receipt with covering letter explaining the change and reason for the error (eg. error in determining FMV) should be issued to the donor in the correct amount.
A copy of the previously issued receipt for XXX, marked “cancelled” should be provided to the donor with instructions that the donor would need to re-file for the XXXX taxation year, if the receipt in question were then claimed by the donor.
A copy of the letter to the donor, together with the cancelled original charitable receipt and revised charitable receipt should be copied to the Charities Directorate, along with the full particulars or the name and address of the donor.
A copy of the cancelled receipt and the newly issued receipt should be kept in the records of the charity and the charity should file a revised annual information return, form T3010, for the year XXXX, to reflect the changes in the receipts issued.

Source: Policies and Technical Information – Information Letter CIL 2001-023

Question 4

What is the penalty for issuing receipts with false information?

Accepted Answer

Short answer

A registered charity that issues an official donation receipt with incorrect or incomplete information can be subject to a penalty of five per cent of the eligible amount stated on the receipt. This penalty increases to 10 per cent if the violation is repeated within five years. A registered charity that issues an official donation receipt that includes deliberately false information is liable to a penalty equal to 125 per cent of the eligible amount stated on the receipt.

Long answer

If a charity is subject to more than $25,000 in penalties for having issued false receipts, that charity may have its charitable status suspended for one year.

A registered charity that disregards or continues to disregard the receipting requirements of the Income Tax Act could also have its registration revoked.

Question 5

Is there anything else that our charity should know about false receipting?

Accepted Answer

The Canada Revenue Agency (CRA) has a growing concern regarding false receipts discovered when auditing individual’s income tax returns. Some of the false receipts have been produced by the charities themselves; some have been created by others without the charity even being aware of the scheme.

Charities should take the utmost care to protect and ensure the integrity of their official income tax receipts. Not only is it important to keep proper books and records of all donations so that accurate receipts can be issued, but also so that amounts can be verified if reviewed or audited by the CRA.

It is equally important to maintain adequate internal controls to restrict access to the receipts and related software programs:

All blank receipts should be kept in a fireproof safe;
or
at a minimum, under lock and key in a secure storage room.
Computer programs should be password protected with access restricted to those who are responsible for issuing the receipts.

Your charity may receive a request from the CRA asking for the donor’s name and the amount on a particular receipt by number. This is one way they determine if a taxpayer’s receipt is valid.