When a donor makes a gift to a charity and receives something in return (known as an advantage by the Canada Revenue Agency), the charity can sometimes issue a charitable tax receipt for part of the value of the gift. This is called split receipting.
Rules for split receipting
Split receipting arises when a charity provides some value to a donor (an advantage) in recognition of, or in return for, their gift. The general principle is that a receipt can be issued for the value of the gift less the value of the advantage.
Situations in which a donor might receive an advantage include:
- fundraising events, including dinners or cocktails;
- silent or live auctions;
- concerts, shows, or sporting events (for example, golf tournaments); and
- membership fees paid to a charity.
Before you can issue a tax receipt for a gift or part of a gift, you must
- be satisfied that the donor really intended to make a gift (as opposed to simply obtaining the advantage); that is, that the donor intended to enrich the charity, and
- be able to determine the values of both the gift and the advantage.
The Canada Revenue Agency (CRA) has two basic rules about the size of advantages relative to the gift:
- Very small advantages do not need to be deducted from the amount of the tax receipt. Specifically, advantages that are both $75 or less in value and less than 10% of the value of the gift can be ignored when determining the amount of the tax receipt, and a tax receipt may be issued for the full amount of the gift (CRA refers to this provision as a de minimis threshold);
- Large advantages mean that no tax receipt can be issued. Specifically, if the value of the advantage is more than 80% of the value of the gift, then no receipt may be issued for the gift. (In exceptional situations, CRA may consider an exemption to this rule, but only if the donor's intention to make a gift can be clearly demonstrated. Contact the CRA Helpline if you believe you have such an exceptional situation.)
If the value of the advantage is between the 10% / $75 and the 80% limits, then a split receipt is issued for the difference between the value of the gift and the value of the advantage.