Confirm you are allowed to receipt
Only certain organizations can issue official donation receipts, and the main group is registered charities. A non-profit that is not registered cannot issue a receipt that lets a donor claim a tax credit, however worthy its cause. If you are unsure of your status, confirm it before the first receipt goes out, because a receipt from an organization that cannot issue one causes problems for the donor as well as for you.
Receipting is also a choice, not a duty. The Income Tax Act does not require a charity to issue a receipt for every gift, and some set a minimum amount or skip receipts at certain events. If you do that, say so clearly in your fundraising material, because a donor cannot claim a credit without a receipt. This guide covers the charity’s side of receipting. The donor’s side, meaning how the credit is claimed, is covered in our article on the charitable donation tax credit in Ontario.
Test each donation before you receipt it
Start with two questions. First, is it a gift? Services given to the charity, such as volunteer time or a discounted invoice, do not qualify, and a receipt cannot be issued for them. Second, who is the true donor? You can receipt only the person or organization that actually made the gift, using that donor’s name and address. A business that gives equipment is the donor, not its owner, unless the owner can show in writing that they bought the item personally.
The CRA’s examples are useful. When a store collects money at the till, the customers are the donors, not the store. When someone collects cash from friends and cannot say who gave what, you cannot name the true donors and so cannot receipt. When two people co-own donated property, each gets a receipt for their share, and you need evidence of the true donor for every receipt you issue.
Work out the eligible amount
The eligible amount is what the donor can claim. It is the value of the gift minus the value of any advantage the donor, or someone associated with them, receives in return. If a donor pays $100 for a fundraising dinner ticket and the meal is worth $40, the eligible amount is $60. That example is illustrative only.
Two thresholds matter. If the advantage is worth more than 80% of the gift, the CRA generally treats the donor as not intending to make a gift, and you cannot issue a receipt. And advantages of nominal value, no more than the lesser of $75 or 10% of the gift, need not be subtracted, but that shortcut does not apply to cash or near-cash items such as vouchers, or to the main object of an event such as the meal. Keep the working that shows how you valued each advantage.
Complete every required field
A receipt for a cash gift must show a statement that it is an official receipt for income tax purposes, your name and address as on file with the CRA, a unique serial number, your registration number and the place where it was issued. It also needs the date or year the gift was received, the date the receipt was issued, the donor’s full name and address, the amount of the gift, the amount and description of any advantage, the eligible amount, the signature of an authorized individual, and the name and website of the CRA.
Non-cash gifts add a brief description of the property and the appraiser’s name and address if it was appraised, and the amount is the fair market value when the gift was made. An appraisal is recommended for items worth $1,000 or more, but it is not a legal requirement; without one you must be able to justify the value. Issue a separate receipt for each non-cash gift. The CRA’s sample receipts are a reliable template, and its fourth sample covers all gift types.
Time, send and sign receipts safely
There is no legal deadline for issuing a receipt, but the CRA suggests doing it by the end of February after the year of the gift so donors can file. For cash gifts you may issue one cumulative receipt for the year. Mailed gifts are dated by the postmark, so keep the stamped envelope.
Computer-generated and emailed receipts are acceptable if they contain all required information and cannot be altered. In practice that means a read-only format, restricted access to donor records, backups and a signature controlled by a responsible person.
Correct mistakes and keep the records
If a receipt is lost or wrong, issue a replacement that has all the required information, carries the serial number of the original and states that it replaces it. Mark your copy of the original cancelled and keep it. Do not simply overwrite a record.
Keep copies of receipts for two years from the end of the calendar year of the donation, or of the cancellation or reissue. Your ledgers, financial statements and source documents have a longer six-year period. Penalties are real: incorrect information on a receipt can cost 5% of the eligible amount, and deliberately false information 125%. Reconcile your receipt register to the donations in your ledger each year, and ask your accountant to review any unusual gift before you receipt it.
Your conversation checklist
- Confirm your organization can issue receipts
- Decide whether the payment is a gift
- Identify the true donor and keep evidence
- Record the value and any advantage received
- Check the 80% and $75 or 10% tests
- Complete every required field and serial number
- Obtain an authorized signature
- Replace errors with a cross-referenced receipt
- Keep copies and reconcile to the ledger
Further reading & sources
- CRA: What information must be on an official donation receipt from a registered charity?
- CRA: What you need to know to issue an official donation receipt
- CRA: Split receipting
- CRA: Correcting or replacing official donation receipts
- CRA: Books and records for a registered charity
Tax rules and administrative requirements can change. Check the applicable official guidance and confirm your circumstances with a qualified adviser. This guide is not an assessment of your filing, payment or legal obligations.