A Guide to Charitable Receipting for Non-Cash Gifts

TL;DR: A registered charity can issue an official donation receipt for a non-cash gift only if the item is property, is given voluntarily, and has a fair market value the charity can determine. The receipt shows that value, capped by the deemed fair market value rule in ITA s. 248(35), minus any advantage the donor received (ITA s. 248(30)–(32)). It must also contain every element required by Income Tax Regulation 3501. CRA strongly recommends an independent appraisal for items worth more than $1,000.

Donated goods reach charities every week: auction items, artwork, laptops, vehicles and furniture. If you are the treasurer, executive director or fundraising lead who signs the receipts, this guide shows you when you can receipt a gift in kind, how to value it, and what CRA requires on the receipt.

What do the key receipting terms mean?

• Gift: A voluntary transfer of property to a qualified donee, made with the intention of giving. The donor may receive a small benefit back.
• Gift in kind (non-cash gift): A gift of property other than cash, such as goods, securities or land.
• Fair market value (FMV): The highest price the item would sell for in an open market, between a willing, informed buyer and seller acting independently.
• Advantage: Anything the donor gets back for the gift, such as a meal, tickets or a product.
• Eligible amount: The FMV of the gift minus the advantage. This is the amount on the receipt.
• Deemed fair market value: A rule that caps the receipt at the donor's cost when the donor acquired the item recently or through a tax shelter.

When can a charity issue a receipt for a non-cash gift?

A charity can receipt a non-cash gift when it meets five tests. Under CRA's "What is a gift" guidance, the transfer must be:

1. Voluntary. A gift made under a court order or contract does not qualify.
2. Property. Goods, land and securities qualify. Services, time and labour do not.
3. Completely transferred. The charity must own the item. A promise to donate later, or a loan of an item, is not a gift.
4. Made with intention to give. CRA generally treats a transfer as a gift only when the advantage is 80% or less of the gift's value (ITA s. 248(30)).
5. Valuable at a determinable FMV. If the charity cannot determine the item's FMV, it cannot issue a receipt.

Which non-cash gifts can a charity receipt?

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For the full list of non-qualifying transactions, see our article What transactions usually don't qualify as gifts in a registered charity?

Who determines the fair market value of a donated item?

The charity is responsible for the value on its receipts, not the donor. CRA allows a member of the charity, or another person with enough knowledge of the item, to value property worth less than $1,000. For property expected to be worth more than $1,000, CRA strongly recommends a professional appraisal by someone with no connection to the donor or the charity.

When an appraiser values the item, the receipt must show the appraiser's name and address. Keep the appraisal report in your records. If no one can reliably value the item, do not issue a receipt.

What is the deemed fair market value rule?

Under ITA s. 248(35), the receipt amount is the lower of the item's FMV and the donor's cost when the donor:

• acquired the item less than three years before the gift,
• acquired it less than ten years before the gift, mainly to donate it, or
• acquired it through a gifting arrangement that is a tax shelter.

Example: A donor buys a painting for $300. A year later, an appraiser values it at $1,000, and the donor gives it to your charity. Because the gift falls within three years of purchase, your receipt must be for $300, not $1,000.

The rule does not apply to gifts made on death, inventory, Canadian real property, certified cultural property, certain publicly traded securities, or ecological gifts. Those gifts are receipted at FMV.

How do you receipt a non-cash gift when the donor gets something back?

Subtract the advantage from the gift's value. This method is called split receipting (ITA s. 248(30)–(32)). Two thresholds apply:

• The 80% threshold. If the advantage exceeds 80% of the gift's value, CRA generally treats the transfer as having no intention to give, and no receipt issues. A donor can still try to prove intention to CRA directly.
• The de minimis rule. If the advantage is no more than $75 or 10% of the gift's value, whichever is less, you do not have to deduct it.

Example: A donor gives an original sculpture appraised at $2,000 and receives two gala tickets worth $300. The de minimis limit is $75 (the lesser of $75 and $200), so you must deduct the $300. The 80% threshold is $1,600, and $300 falls below it. You issue a receipt for an eligible amount of $1,700.

For golf tournaments, galas and auctions, see our Legal Guidelines for Fundraising Events for Canadian Charities.

What must an official receipt for a non-cash gift include?

ITA s. 118.1(2) and Regulation 3501 require every official receipt for a non-cash gift to show:

• a statement that it is an official receipt for income tax purposes
• the charity's name, address and registration number as on file with CRA
• a unique serial number and the place where it was issued
• the date the gift was received, and the issue date if different
• the donor's full name and address
• a description of the property
• the property's fair market value (the deemed FMV, where that rule applies)
• the value and description of any advantage
• the eligible amount of the gift
• the appraiser's name and address, if appraised
• the name and website address of the Canada Revenue Agency

A receipt missing a required element is not a valid official receipt.

Can a charity give a receipt for donated services?

No. Services are not property, so CRA does not allow a receipt for time, labour or professional work (CPC-017). A charity can use a two-step approach instead. It pays the service provider in full, and the provider then chooses to donate the cash back. The charity can receipt that cash donation because it is a voluntary gift of property.

Frequently Asked Questions

Can a charity issue a donation receipt for a non-cash gift?

Yes. A registered charity can receipt a non-cash gift that is a voluntary, completed transfer of property with a determinable fair market value. The receipt must meet Regulation 3501.

Who decides how much a donated item is worth?

The charity does. A knowledgeable person may value items under $1,000. CRA strongly recommends an independent appraisal for items expected to be worth more.

Can the donor's own appraisal be used?

A charity can rely on an appraisal from a qualified appraiser who is independent of both the donor and the charity. The charity remains responsible for the accuracy of the receipt.

What happens if the donor bought the item recently?

Under ITA s. 248(35), the receipt is capped at the donor's cost if the donor acquired the item within three years of the gift, within ten years mainly to donate it, or through a tax shelter.

Can a charity receipt a gift certificate?

Not when the business that issued it donates it, until the certificate is redeemed for property (CG-007). A certificate that a donor bought from the issuer and then donated can be receipted.

What if the charity can't determine the item's value?

It cannot issue a receipt. CRA prohibits receipts where the FMV of the gift, or of any advantage, cannot be determined.

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