How Do I Determine the Fair Market Value for an In-Kind Donation Charity Receipt?

In order to issue a tax receipt for a gift, it is necessary to first determine the fair market value of the gift as well as any benefits the donor received in exchange for making the gift. If the fair market value of the gift or benefit cannot be determined, a tax receipt cannot be issued.

This article covers how to value in-kind gifts for tax receipt purposes, how to apply the deemed fair market value rule, and how to handle specific property types — including cryptocurrency, real estate, and publicly traded securities. It also covers the process of valuing benefits provided to donors in exchange for their contributions.

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What Is an In-Kind Donation?

An in-kind donation — also called a gift in kind or non-cash gift — is any contribution to a registered charity that is not money. This includes donated goods, property, equipment, inventory, publicly traded securities, real estate, and physical assets of any kind.

In Canada, registered charities can issue official donation receipts for eligible in-kind gifts, but only if the fair market value of the gift can be reliably determined at the time of the donation.

In-kind donations do not include donated services — such as a lawyer donating their time or a contractor volunteering their labour. CRA does not permit official donation receipts for donated services or volunteered time under the Income Tax Act, regardless of the monetary value of those services.

What Is Fair Market Value?

According to the Canada Revenue Agency (CRA), fair market value typically refers to the highest possible value that a property can fetch in an open and unrestricted market, where the buyer and seller are both willing, knowledgeable, informed, and not dependent on each other.

• "Highest dollar value" refers to the fair market value of a property, even if the property being valued lacks an apparent price. This means fair market value is established based on the retail price of the item, regardless of whether it is a distinctive or personal item contributed by the owner.
• "Open and unrestricted market" refers to a market where numerous buyers and sellers exist, all competing to purchase and sell goods. In this scenario, fair market value is the highest amount that a willing buyer and a willing seller would agree upon for the item. In certain situations, it may be necessary to enlist a professional appraiser or valuator to determine fair market value.
• "Willing buyer and a willing seller" means the assessment should be made without taking into account any external pressures that may influence either party to buy or sell. For example, a seller who is compelled to sell may reduce their price below market value to expedite the sale, whereas a buyer who is forced to buy may end up paying more than fair market value.
• "Acting independently" — also referred to as acting at arm's length — means that neither the buyer nor the seller has any control or influence over the other, and that they have no relationship that could lead one to treat the other in a preferential manner, such as a familial or marital connection.

Tip: Assessing fair market value can be an intricate process. It is strongly advised to seek help from a professional appraiser or valuator if the gift is complex or high in value.

How Is Fair Market Value Calculated?

There are multiple approaches to determining fair market value.

1. Open market. Many types of property can be appraised easily because they are available for purchase on an open market at publicly listed prices. The listed price of such items can often serve as the fair market value for tax receipt purposes.
2. Comparable items in an open market. Occasionally, a particular item may not be readily available on the open market, but similar items may be. If a comparable item is available, its price can be used as the fair market value for tax receipt purposes. You can also calculate an average value across multiple comparable items.
3. Appraiser or valuator. If neither of the above methods provides an accurate fair market value, a professional appraiser or valuator will be required.

How to Determine Fair Market Value for an In-Kind Donation: Step by Step

Use the following process when a donor contributes a non-cash gift to your registered charity.

Step 1 — Identify the type of property donated. The correct valuation method depends on the nature of the gift. Publicly traded securities, real estate, artwork, equipment, inventory, and cryptocurrency each follow different CRA guidelines.

Step 2 — Check if a publicly listed price exists. If the donated item is sold on an open market — such as retail goods or publicly traded stocks — the listed price at the time of donation is typically your fair market value.

Step 3 — Find comparable items if no listed price exists. Search for similar items sold in an arm's-length transaction and use that price as your benchmark. You can use an average of multiple comparables if a single match is not available.

Step 4 — Hire a qualified appraiser if the item is complex or high-value. This applies to real estate, artwork, collectibles, privately held shares, and any item without a clear open-market price.

Step 5 — Check whether the deemed fair market value rule applies. If the donor acquired the property within three years before donating it — or within ten years if it was acquired primarily to donate — the deemed FMV rule may cap your receipt amount. See the section below for full details.

Step 6 — Document your valuation. Keep all invoices, appraisal reports, comparable price listings, and any calculations used to arrive at the FMV. CRA may request this documentation during a review or audit.

Step 7 — Issue the receipt based on the determined FMV. If FMV cannot be reliably established, do not issue an official donation receipt. The charity may still accept the gift, but the donor will not receive a tax deduction.

Maintaining Records for Fair Market Value

It is important to maintain documentation that demonstrates how the fair market value of any gifts in kind received by your charity was determined. Such records may include:

• Invoices for the donated item or comparable items that display their retail value
• Publicly available price catalogues, flyers, or online listings
• Newspaper or online records of stock market prices
• Copies of appraiser or valuator assessments
• Details of any calculations performed to arrive at the final value applied to the tax receipt

Keep in mind that prices change over time. What appears to be an acceptable fair market value today could be difficult to validate in the future without proper documentation generated at the time the gift was received.

Determining the Combined Value of Multiple Items

On occasion, multiple items are consolidated into a single gift, or a donor receives multiple benefits in exchange for a contribution. In such situations, the fair market value is determined by attributing a distinct value to each identifiable item and then totalling those values.

In some circumstances, using averages for comparable items or generating an estimate without valuing each item separately may be feasible. Regardless of the method used, the valuation must be justifiable with evidence.

If a donor gives a gift and receives something in return, this is known as split receipting — where only the portion of the gift that exceeds the value of the benefit received is eligible for a tax receipt. For more detail, see our article on what is split receipting.

The Deemed Fair Market Value Rule

The CRA occasionally requires that the valuation of gifts for tax receipt purposes be based on the donor's original cost instead of the current fair market value. This deemed fair market value rule applies to in-kind gifts when the donor acquired the property:

• within a tax shelter arrangement;
• less than three years prior to making the donation; or
• less than ten years before the donation, if one of the primary objectives for obtaining the property was to donate it.

In these cases, the deemed fair market value rule requires that the tax receipt amount be the lesser of:

• the gift's fair market value; and
• the donor's cost of the property (or, for capital property, its adjusted cost base immediately before the donation).

However, this rule has several exceptions. The following gifts must be assessed at fair market value, even if one of the above conditions is met:

• Property resulting from a taxpayer's death
• Inventory from a business
• Real property situated in Canada
• Certified cultural property (distinct valuation procedures apply)
• Certain publicly traded securities

Fair Market Value by Property Type

CRA has established specific guidelines for determining fair market value across different types of donated property. The correct approach depends on what is being donated. Here is how each major category is handled.

Publicly Traded Securities

Publicly traded securities — including stocks, bonds, and mutual funds — are valued based on the closing market price of the security on the date of donation.

One important planning note for donors: when eligible publicly traded securities are donated directly to a registered charity, the capital gains tax that would normally apply on disposition is eliminated. This makes a direct donation of appreciated securities significantly more tax-efficient than selling the securities and donating the cash proceeds.

The deemed fair market value rule does not apply to publicly traded securities. The charity issues a receipt for the full FMV at the time of transfer.

Real Property (Real Estate)

Real estate donations require a qualified appraisal by a designated appraiser. The appraiser must assess the property's fair market value at the time of the gift — not at the time of a later sale or transfer.

Real property situated in Canada is also exempt from the deemed fair market value rule, meaning it must be valued at actual FMV regardless of when the donor acquired it.

Charities accepting real estate donations should seek legal advice before accepting the gift, as environmental liabilities and title issues can create risks for the organization.

Artwork and Cultural Property

Artwork donated to a registered charity is valued at FMV using a qualified appraiser with expertise in the relevant type of art.

If the artwork qualifies as certified cultural property under the Cultural Property Export and Import Act, it is reviewed and valued separately by the Canadian Cultural Property Export Review Board (CCPERB). This process follows different valuation procedures and may attract an enhanced tax incentive for the donor.

Inventory from a Business

When a business donates inventory to a registered charity, the deemed FMV rule does not apply. The FMV of the inventory is assessed at its retail or fair market value at the time of donation, and the charity can issue a receipt for that amount.

Businesses that donate inventory may also be entitled to a deduction under the Income Tax Act. Charities should not advise donors on the tax treatment of their gift — donors should consult their own accountants or tax advisers.

Cryptocurrency and Digital Assets

CRA treats cryptocurrency as property, not currency. If a donor contributes cryptocurrency directly to a registered charity, the fair market value is determined by the market price of the digital asset at the date and time of the transfer, using a reputable exchange rate source.

Your charity should document the exchange rate used, the source of that rate, and the date and time of the transfer. CRA's guidance on cryptocurrency donations continues to develop, and charities are advised to consult legal counsel before issuing receipts for large or complex crypto gifts.

This is a growing area — more Canadian donors are contributing digital assets, and charities that are not prepared to handle them risk issuing incorrect receipts or missing out on significant contributions.

Listed Personal Property

Listed personal property (LPP) includes items such as jewellery, rare manuscripts, stamps, coins, and works of art. These items require valuation at FMV, typically through a professional appraiser. CRA applies special rules to LPP gains and losses, so proper documentation is particularly important for this category.

Non-Qualified Securities

Non-qualified securities include shares in private companies and other securities that are not publicly traded. If a donor contributes non-qualified securities to a registered charity, the charity cannot issue a receipt at the time of donation.

The receipt can only be issued after the securities are sold or otherwise disposed of, and the receipt amount is based on the proceeds the charity actually receives — not the FMV at the time of donation.

Charities should exercise significant caution before accepting non-qualified securities and should obtain legal advice before accepting these types of gifts. For more context, see our article on what transactions usually don't qualify as gifts to a registered charity.

Common Mistakes Charities Make When Valuing In-Kind Donations

Even well-run charities make errors when handling in-kind gifts. Here are the most common mistakes to avoid.

Issuing a receipt for donated services. CRA does not permit official donation receipts for donated labour, professional services, or volunteered time — even if the work has significant monetary value.

Using the donor's purchase price instead of current FMV. The relevant value is what the item would sell for today in an open market, not what the donor originally paid — unless the deemed FMV rule applies.

Failing to document the valuation method. Without documentation, your charity cannot defend its FMV determination during a CRA review or audit.

Not checking whether the deemed FMV rule applies. Charities sometimes issue receipts at full FMV when the deemed rule would require a lower amount. Always check when the donor acquired the property.

Accepting non-qualified securities and issuing an immediate receipt. A receipt cannot be issued for non-qualified securities at the time of donation. The receipt is only issued after the securities are sold and the proceeds are received.

Relying on the donor's own estimate. The charity — not the donor — is responsible for determining and documenting FMV. Accepting the donor's stated value without verification puts your charity at risk during a CRA audit.

Not seeking legal advice for unusual or high-value gifts. Complex gifts — including real estate, private company shares, and large cryptocurrency donations — carry legal and financial risks beyond the receipt. Consulting a charity lawyer before accepting these gifts protects your organization.

Frequently Asked Questions

Can a charity issue a receipt if fair market value cannot be determined?

No. If the FMV of an in-kind gift cannot be reliably established, CRA does not permit the charity to issue an official donation receipt. The charity may still accept the gift, but the donor will not receive a tax receipt for it.

Does a charity need a professional appraisal for every in-kind donation?

Not always. If the donated item has a clear, publicly listed market price — such as retail goods or publicly traded securities — an independent appraisal is generally not required. However, for complex or high-value items such as real estate, artwork, collectibles, or private company shares, a qualified appraisal is strongly recommended and may be required by CRA.

Can a charity issue a receipt for a cryptocurrency donation in Canada?

Yes, provided the fair market value can be reliably established at the time of the transfer. CRA treats cryptocurrency as property. FMV is based on the market price at the date and time of donation using a reputable exchange. Charities should document the source and rate used, and seek legal advice for large or complex crypto gifts.

What is the deemed fair market value rule for in-kind donations?

The deemed FMV rule requires that the tax receipt be based on the donor's original cost — or adjusted cost base — rather than current FMV when: the donor acquired the property within a tax shelter arrangement; less than three years before donating; or less than ten years before donating if one of the main purposes was to make the donation. Several property types are exempt from this rule, including real estate in Canada, publicly traded securities, and business inventory.

Are donated services eligible for an official donation receipt in Canada?

No. CRA does not permit registered charities to issue official donation receipts for donated services, volunteer time, or professional labour — regardless of the estimated monetary value of those services.

Who is responsible for determining fair market value — the donor or the charity?

The charity is responsible for determining and documenting the FMV of in-kind donations. While donors may provide invoices or estimates, the charity must independently verify the value and maintain supporting records. 

What records should a charity keep for in-kind donation valuations?

CRA recommends keeping: original invoices or receipts for the donated item or comparable items, publicly available price listings or catalogues, copies of appraiser or valuator reports, records of stock market prices for securities, and details of any calculations used to arrive at the FMV.

Can a charity issue a tax receipt for auction items donated to a fundraiser?

This depends on whether the item donated to the charity or the item won by the bidder is being receipted — and the relationship between the two.

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