Issuing Charitable tax receipts

Reviewed January 2018

Relevant Legislation

Canada Revenue Agency (CRA) guidelines at:

www.cra-arc.gc.ca/tx/chrts/menu-eng.html.

 Intent

As a Canadian registered charity, LOFT Community Services is authorized to issue to its donors official receipts for income tax purposes. In doing so, LOFT complies fully with all applicable Canadian tax laws and regulations.

These rules change from time to time, and if there are discrepancies between this policy and current CRA policy, the interpretation of CRA will govern.

Definitions

Donation: a voluntary transfer of property without valuable consideration to the donor.

Fair Market Value (FMV): CRA defines fair market value as “the highest price, expressed in dollar amount, the property would bring, in an open and unrestricted market, between a willing buyer and a willing seller who are both knowledgeable, informed, and prudent, and who are acting independently of each other.”

Gifts-in-kind: Gifts-in-kind, also called non-cash gifts, are gifts of property. They cover items such as artwork, equipment, securities and cultural and ecological property. This includes tangible personal property.

  Policy

LOFT issues tax   receipts in compliance with CRA guidelines. In order to do so, LOFT requires donors   to provide their legal name and valid mailing address. When gifts by made by   credit card, LOFT may also  require the   donor to provide a current telephone number.

Who   Receives the Receipt

A charitable receipt will only be issued in the name of the actual donor. If the donation is from an individual the receipt will be issued in the name of the individual. If the donation is from a corporation, the donation will be issued in the name of the corporation.

An individual will not be issued a receipt for a gift from a trust or a company, even when the individual is the sole owner of the trust or company.

Gifts of Cash

LOFT issues tax receipts for gifts of cash of $10.00 or more, and will issue receipts for gifts under $10.00 upon request. This includes cash donations made by credit card or by cheque. This information is provided to donors at the time the gift is made, and is included on all direct mail response forms.

Gifts made in other than Canadian currencies are receipted according to their value in Canadian dollars at time of deposit in LOFT’s bank.

Cash donations/cheques received from Foundations or other registered charities are only tax receipted at the request of the donor.

Gifts in Kind

In order to issue a charitable tax receipt for a gift-in-kind, LOFT must be able to objectively establish the Fair Market Value (FMV) of the gift, and must be able to confirm that the gift was received.

LOFT is responsible for reporting the FMV of a gift in kind on the official tax receipt. In order to determine the FMV, a proof of purchase or an independent appraisal is required for items valued over $1,000.

LOFT will issue a charitable receipt for new items donated by an individual when the item is accompanied by a receipt of purchase.

When a business donates inventory, the business is required to indicate the FMV in writing, and LOFT will confirm the valuation using third party sources including online or printed catalogues. LOFT is permitted to issue a tax receipt provided there is no material benefit to the business such as promotion or advertising.

LOFT does not, as a rule, issue tax receipts for used items of clothing, furnishings or other tangible personal goods. Donations of used furniture with a FMV over $1,000 may be tax receipted if the donor requests a receipt, the recipient program has need of the item and the FMV can be verified from objective sources.

Gifts of securities: Gifts of securities are considered to be gifts-in-kind. Such donations are assigned the value at the time the gift is received in LOFT’s brokerage account.

Donation of Services: A contribution of service, that is, of time, skills or efforts, is not property and, therefore, does not qualify as a gift or gift in kind for purposes of issuing official donation receipts.

Issuing Receipts

LOFT-issued tax receipts are only valid if signed by an individual authorized by LOFT to acknowledge donations. As a general rule, this includes the Director of Development, Director of Finance, Director of Operations or the CEO.

Procedures

See Development Manual