Who can issue official donation receipts:
When it comes to organizations issuing donation receipts, it’s important to determine whether you are eligible to do it. Under the Income Tax Act, qualified donees are organizations that can issue official donation receipts. The CRA has a guidance on who is considered a qualified donee. Some examples of a qualified donee include registered charities, a registered journalism organization, and a registered Canadian municipal or public body performing a function of government. If your organization is not considered a qualified donee it will not be allowed to issue official donation receipts. In addition, although qualified donees are allowed to issue receipts there is no requirement in the Income Tax Act for them to issue an official donation receipt to a donor.
When can you issue official donation receipts:
For organizations that wish to issue official donation receipts, there is no obligation to issue them within a certain time frame. The CRA generally suggested receipts be issued by February 28th of the calendar year that follows the year of donation, to allow individual taxpayers to claim their donations on their annual income tax return. The issued receipts can be made periodically or in a cumulative receipt for the year for cash donations. For non-cash donations, a separate receipt must be issued when the non-cash donations are made on different dates as the fair market value of an item is for a particular date.
ITA Requirements for official donation receipts:
In regards to the contents of the official donation receipt itself, the CRA outlines guidelines as to what should be included on the receipt which will be outlined below. There are different requirements for official donation receipts for cash gifts and non-cash gifts.
Official Donation Receipts Cash gifts must include the following:
- a statement that it is an official receipt for income tax purposes
- the name and address of the charity as on file with the Canada Revenue Agency (CRA)
- a unique serial number
- the registration number issued by the CRA
- the location where the receipt was issued (city, town, municipality)
- the date or year the gift was received
- the date the receipt was issued
- the full name, including middle initial, and address of the donor
- the amount of the gift
- the amount and description of any advantage received by the donor
- the eligible amount of the gift
- the signature of an individual authorized by the charity to acknowledge gifts
- the name and website address of the CRA
Official Donation Receipts Non-cash gifts must include the following:
- the date the gift was received (if not already included)
- a brief description of the gift received by the charity
- the name and address of the appraiser (if the gift was appraised)
These mandatory elements may change over the next few months if the proposal by the Federal Government in their 2024 Budget is passed. In that case, the place of issuance of the receipt, the name and address of the appraiser and the middle initial of the donor will then not be required.
Consequences for failure to meet the requirements:
It is important to ensure that the official donation receipts that are issued by qualified donees contain the correct amount of information required and that the information contained in the receipt is accurate. Organizations that do not comply with the requirements for official donation receipts are at risk of including incorrect information on their donation receipts and will be liable to a penalty equal to 5% of the eligible amount stated on the receipt. If it is a repeat offence, the penalty will increase to 10% for an offence repeated within five years. In addition to this, if an organization deliberately includes false information, it could be liable to a penalty equal to 125% of the eligible amount stated on the receipt. The charity could also be in danger of having its charitable status suspended or revoked for contravening the receipting requirements of the ITA.
It is important that organizations that wish to issue official donation receipts review these rules carefully and periodically check the CRA website and guidance on official donation receipts for any further information and updates.
If you have questions regarding receipting and wish to retain our law firm, you can contact us.