The ability for registered Canadian charities (or other qualified donees) to issue donation receipts is a huge benefit and also encourages giving.
Donation receipts help offset federal and provincial taxes, can be carried forward up to 5 years, and individuals can donate up to 75% of their net income each year.
Which transactions are eligible?
In order to be eligible to issue a donation receipt, the following conditions must be met:
1. There must be a transfer of property,
2. the gift must be made voluntarily,
There are two categories of gifts:
- Cash – such as cash, cheques, credit cards and web transfers.
- Gifts In Kind – such as supplies, land, listed securities and copyrights.
3. the fair market value of the gift must be able to be determined, and
4. there must be intent or financial sacrifice from the donor.
What do I have to include on the donation receipt?
Official donation receipts for income tax purposes must include the following:
- A statement that it is an official receipt for income tax purposes
- CRA name and website address
- Name and address of charity
- Unique serial number
- Charitable registration number
- Location where the receipt was issued
- Date the gift was received
- Date the receipt was issued
- Full name of the donor
- Amount of the gift
- Amount and description of any advantage received by the donor
- Eligible gift amount
- Signature of the authorized individual from the charity to acknowledge gifts
When do I not issue a donation receipt?
Do not provide a donation receipt in the following instances:
- The donation is intended for another organization.
- The true donor cannot be determined.
- The fair market value cannot be determined.
Not all transactions are eligible for a donation receipt – when in doubt, don’t receipt!
Timing There is no requirement to issue a donation receipt in a specific time frame, although CRA recommends February 28 for the previous calendar year.
Replacements Replacement donation receipts can be issued if the serial number on the original receipt is used.
Electronic Options Electronic donation receipts can be issued and can be sent by e-mail in PDF form.
Thresholds Charities can set thresholds for donation receipting but are not required to issue donation receipts.
Paperwork Charities must maintain copies of donation receipts issued for 2 years after the year for which the receipt was issued. *As CRA requires 7 years for most other things, it is recommended to hold them for longer than the 2-year requirement.
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