Guidelines for Charities and Qualified Donees on Issuing Donation Receipts

Q: Guidelines for Charities and Qualified Donees on Issuing Donation Receipts

Learn the CRA’s official guidelines for charities and qualified donees on issuing donation receipts correctly to ensure compliance and prevent costly errors.

Canadian charities and qualified donees support communities through donations. One of their key responsibilities is issuing official donation receipts.

These receipts let donors claim tax credits or deductions. This makes them essential for fundraising and legal compliance.

Charities must understand the rules for issuing donation receipts. The Canada Revenue Agency (CRA) sets guidelines to prevent compliance issues and ensure receipts include all required information.

Mistakes can put organizations and their directors at risk. This guide explains the main rules for issuing donation receipts in Canada.

It covers who can issue receipts, what information is needed, and why proper receipting matters for both charities and donors.

Authority to Issue Official Donation Receipts

Only certain organizations can legally issue official donation receipts. The CRA regulates this authority to ensure receipts are valid for tax purposes.

The CRA sets clear rules on which entities qualify and what conditions they must meet. Qualified donees are organizations recognized by the CRA as eligible to issue official donation receipts.

Definition of Qualified Donees

Qualified donees include registered charities, Canadian municipal or public bodies, registered journalism organizations, and amateur athletic associations. These groups must meet legal requirements under the Income Tax Act.

They can issue receipts that donors use for tax credits or deductions. Most regular non-profits cannot issue official tax receipts.

Role of Registered Charities

Registered charities are the most common qualified donees. They must follow strict CRA rules on receipting, including which donations qualify and what information goes on receipts.

Charities benefit from issuing receipts because donors want tax benefits. They must keep accurate records and face penalties for incorrect or fraudulent receipts.

The CRA monitors these activities to maintain trust in the charitable sector.

Registration Number Requirements

Every official donation receipt must show the charity’s CRA registration number. This number confirms the organization’s status and validates the receipt for tax filing.

Receipts without this number are not valid for tax purposes. The registration number must be accurate and clearly displayed with other details like the donor’s name, donation amount, and date.

This helps the CRA track donations and prevents misuse of receipts.

Legal and Policy Framework for Issuing Donation Receipts

Clear legal rules and charity policies govern issuing donation receipts. These rules define who can issue receipts, what information is needed, and how charities handle their responsibilities.

This ensures receipts are valid for tax purposes and supports compliance with Canadian tax law.

Income Tax Act Requirements

The Income Tax Act sets strict rules for official donation receipts. Only registered charities and qualified donees can issue receipts for tax credits or tax deductions.

Receipts must clearly show:

The charity’s registration number
Date of donation
Amount or value of the gift
Donor’s name and address
Statement that it is an official receipt

Receipts must be issued for gifts that qualify as donations. Non-cash gifts require a fair market value.

Incorrect or incomplete receipts can lead to penalties or audits and may risk the charity’s charitable status.

Charity Discretion and Internal Policies

Charities decide how to manage their receipting processes. They set internal rules for authorizing and issuing receipts, ensuring accuracy and record-keeping.

Charities often set rules about:

When to issue receipts (immediately or at year-end)
Handling split receipting when gifts have both a donation and a benefit
Replacing or correcting lost or incorrect receipts

These policies help charities stay organized and protect their reputation. The CRA requires charities to keep receipt copies for at least two years after issuing.

Obligations Versus Best Practices

Charities must follow the Income Tax Act for issuing receipts. This means providing receipts only for gifts that meet the law’s definition of a donation.

Best practices include:

Training staff on receipting rules
Maintaining accurate records
Providing receipts promptly
Reviewing policies regularly to stay current with CRA updates

Following best practices helps charities avoid compliance issues and supports donor trust. This encourages continued giving and proper use of tax credits and tax deductions.

Mandatory Elements and Format of Official Donation Receipts

Official donation receipts must include specific details to be valid for tax purposes. The details vary for cash and non-cash donations.

Charities must maintain proper records to support these receipts. Accuracy and completeness are essential to meet CRA requirements.

Required Information for Cash Donations

Cash donation receipts must include a statement that the receipt is official for income tax purposes. The charity’s full name and address, as registered with the CRA, must appear on the receipt.

The receipt must also show:

The charity’s registration number
A unique serial number for the receipt
The place where the receipt was issued
The date the donation was received
The date the receipt was issued if different
Donor’s full name and address
The amount donated
Description and value of any benefits received by the donor
The eligible amount of the gift for tax purposes
Signature of an authorized person from the charity
CRA’s name and website address

This information ensures the receipt is valid for tax returns.

Required Information for Non-Cash Donations

Non-cash donation receipts must include all elements for cash donations plus extra details. The receipt must describe the donated property briefly and clearly.

The receipt must also state:

The date the donation was received, if not already on the receipt
The name and address of any appraiser involved
The deemed fair market value of the donated property

For gifts valued at $1,000 or more, a professional appraisal is strongly recommended. The eligible amount for tax credit cannot exceed the property’s fair market value.

Record-Keeping and Retention

Charities must keep copies of all official donation receipts and related documents. These records are essential for audits and verifying donor claims.

The CRA requires charities to retain books and records for at least two years after the calendar year in which the donation was made. This includes copies of tax receipts, donor information, and postmarked envelopes when needed.

Proper record-keeping supports transparency and compliance, helping charities avoid penalties or complications with the CRA.

Determining Eligibility for Receipting Donations

Charities must clearly understand what counts as a gift before issuing donation receipts. Not all payments or contributions qualify, especially when services or membership fees are involved.

Charities must separate the value of any benefit the donor receives from the eligible donation amount.

Definition of a Gift

A gift is a voluntary transfer of property or money without expecting something of equal value in return. The transfer must be intentional and give the charity full ownership.

The eligible amount is usually the fair market value of the gift. If the donor receives a benefit, the value of that benefit must be deducted from the donation’s fair market value.

Examples include cash donations, gifts of publicly traded securities, or property donations. The gift must benefit the registered charity or qualified donee.

Payments That Do Not Qualify

Payments that are not gifts cannot receive official donation receipts. These include purchases of goods, services, or benefits that provide direct value to the donor.

If a donor buys tickets to an event or pays for a fundraising dinner, the amount paid for food or entertainment is not eligible for a donation receipt.

Only the portion above the value of the benefit, if any, can be considered a gift.

Donations of Services

Volunteer time or services provided to a charity do not count as charitable donations. No money or property changes hands, so services cannot be receipted.

If a donor pays for someone else to provide services or buy materials for the charity, the payment may be eligible if it meets the gift criteria.

Expenses reimbursed by the charity or benefits from providing services also disqualify the payment from donation receipting.

Membership Fees and Other Special Cases

Membership fees do not qualify as gifts if donors receive benefits in return. If the benefits equal or exceed the fee, no donation receipt can be issued.

Some membership fees include a donation portion if the benefits are less than the payment. Charities must separate this amount for receipting purposes.

Other special cases include gifts of property with advantages or split donations where part of the donation goes to other recipients. The eligible amount must exclude any non-gift value.

Valuation, Split Receipting, and Special Donation Types

Charities must value gifts carefully to issue correct donation receipts. This includes understanding fair market value, assessing non-cash gifts, and applying split receipting rules when donors receive something in return.

Fair Market Value Rules

Fair market value (FMV) is the price a property would sell for in an open market between a willing buyer and seller. Charities must use FMV to determine the eligible donation amount.

For cash donations, FMV equals the cash amount. For other property, the FMV is based on current market prices.

If the FMV cannot be accurately determined or is inflated, the CRA may disallow the receipt. Charities must keep records showing how they calculated FMV.

Non-Cash Gifts and Appraisals

Non-cash gifts need an appraisal or reliable valuation to establish FMV. Common non-cash gifts include art, securities, and real estate.

Charities should get independent appraisals from qualified professionals for valuable non-cash gifts. Without proper valuation, a donation receipt cannot be issued fairly.

Charities must document appraisal details and keep these records for CRA audits. Certain gifts, like publicly traded securities, are valued using market prices on the donation date.

Split Receipting and Advantages

Split receipting applies when donors receive a benefit in exchange for their gift, such as tickets, merchandise, or services. The charity must subtract the FMV of the benefit from the total gift value to calculate the eligible donation amount.

If the value of the benefit exceeds 80% of the gift's FMV, the CRA does not consider it a gift and no receipt can be issued.

The de minimis rule allows small benefits to be ignored if their value is under $75 or 10% of the gift’s FMV, whichever is less. Charities must always subtract the value of advantages like meal costs or gift certificates.

Charities must apply these rules carefully to issue compliant receipts.

Reporting, Deadlines, and Compliance Responsibilities

Charities and qualified donees must track donation dates accurately. They need to report financial activity in the correct fiscal period and meet all CRA filing deadlines.

Following compliance rules helps maintain registered status and avoids penalties.

Issuing Receipts During Extension Periods

Under the Income Tax Act, there is no legal obligation for registered charities or other qualified donees to provide official donation receipts or issue them within a specific timeframe.

However, if your organization chooses to issue receipts, it should ensure compliance with standard receipting regulations.

While there is no requirement to issue receipts specifically for donations made during an extension period, some organizations may do so as a courtesy to donors who typically receive a single annual receipt for multiple contributions.

Determining the Donation Date

Qualified donees should record the date of donation based on the following guidelines:

In-person or electronic donations: The donation date is when the qualified donee receives the contribution.

Mailed donations: The donation date is considered the postmark date on the envelope. Organizations should retain the stamped envelope as part of their records.

Examples:

A mailed donation received on January 10, 2025, but postmarked December 28, 2024, can be receipted with a donation date of December 28, 2024.

A donation made via cash, cheque, credit card, money order, or electronic payment on January 10, 2025, should have a receipt dated January 10, 2025.

Reporting Tax-Receipted Revenue on the T3010 Return

The extension period does not alter how tax-receipted revenue is reported on the T3010 Registered Charity Information Return.

Charities must report all official donation receipts issued during their 2025 fiscal period on their 2025 T3010 return. This applies to other registered entities, such as journalism organizations and amateur athletic associations.

Example:

A charity with a fiscal year from January 1 to December 31 issues:

$5,000 in receipts between January 1, 2025, and February 28, 2025
$60,000 in receipts between March 1, 2025, and December 31, 2025

The total tax-receipted revenue reported on Line 4500 of the 2025 T3010 return would be $65,000.

Maintaining Accurate Books and Records

Qualified donees are required to keep detailed records of their activities. While not mandatory, best practices include:

Retaining postmarked envelopes for mailed donations
Documenting which receipts were issued during any extension period

These practices help ensure transparency and allow organizations to respond effectively to donor inquiries or requests from the CRA.

Deadlines and Extension Period Guidance

The T3010 filing deadline is six months after the fiscal period ends. For example, if a charity’s fiscal year ends on December 31, the return is due by June 30 the next year.

The CRA may grant an extension if the charity requests it before the deadline.

Missing deadlines can lead to late filing penalties, interest charges, and loss of good standing.

Charities should keep consistent records, track reporting timelines, and submit all required documents on time.

Consequences for Non-Compliance

If charities fail to meet reporting obligations, they may face penalties or lose their receipting privileges. The CRA can revoke a charity’s registration if issues continue, which stops the issuance of official donation receipts.

Non-compliance damages public trust and may reduce donor willingness to contribute. Charities must keep receipts and records for at least six years to stay audit-ready.

Following policies helps protect both the charity and its donors from risks related to invalid receipts or incorrect tax credit claims.

Conclusion

Properly issuing donation receipts is essential for Canadian charities and qualified donees to stay compliant with the Income Tax Act. Keeping accurate records and following clear rules protects both the organization and its donors.

Understanding these guidelines supports transparency and trust in charitable activities. Charities and qualified donees must pay close attention to donation dates, required receipt information, and record-keeping for at least two years.

These steps help avoid compliance issues and ensure donors receive valid tax credits or deductions. Maintaining best practices benefits everyone involved.

For expert support in navigating donation receipting rules, contact B&H Charity Accounting Firm at (289) 301-8883 or visit charityaccountingfirm.ca.

We offer trusted advice and can provide a free consultation to help charities manage their accounting and compliance needs. Schedule a session anytime.

Frequently Asked Questions

Donation receipts in Canada must follow clear rules about who can issue them, what details they must include, and when they are needed. Charities are not always required to issue receipts but often provide them to donors.

The process for giving a receipt is specific and must meet legal standards.

Who can issue donation receipts in Canada?

Only registered charities and qualified donees can issue official donation receipts. Qualified donees include certain organizations approved under the Income Tax Act, such as registered Canadian amateur athletic associations or registered journalism organizations.

What legally needs to be on a receipt in Canada?

Receipts must include the charity’s name and registration number, the date of the donation, the amount given, and a statement that it is an official receipt for income tax purposes.

Additional details like a description of non-cash gifts may also be required.

Do you need receipts for charity donations?

Receipts are needed if a donor wants to claim a tax credit for their gift. Without an official receipt, donors cannot use the donation for tax purposes.

Are charities required to issue receipts?

The Income Tax Act does not legally require charities to issue donation receipts. However, many charities choose to provide receipts to help donors claim tax credits and to maintain transparency.

Do charities give receipts for donations?

Many charities issue receipts for donations, especially when donors request them. Receipts are often provided for cash gifts and other eligible contributions that meet legal requirements.