Glossary: U

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  • Use of property

    When a donor gives the use of property (for example, provides the use of one's cottage or car) to a charity, this is not a transfer of property and is therefore not a gift. No tax receipt may be issued.

    When a charity gives the use of property in return for a gift, however (for example, use of a charity's boardroom in return for a cash donation), this is an advantage. Assuming this advantage can be valued, the split receipting rules apply. If the advantage cannot be valued, then no receipt can be issued for the gift.

    Example 1: Use of property as a donation
    An individual wants to donate a week at his cottage as a silent auction gift. Since there is no transfer of property, no tax receipt may be issued. However, the charity could "rent" the use of the cottage for a week at its fair market value. The individual could then make a cash donation to the charity equal to the amount of the rent payment and receive a tax receipt in return. (In doing this, the individual may have to include the amount of rent as income, deduct appropriate expenses, and then claim the donation in the usual fashion when filing his or her tax return.)

    Example 2: Use of property as an advantage to the donor
    A business makes a $1,000 cash donation to a charity. In return, the charity wants to give the business use of its meeting room for a business meeting. If the fair market value of the use of the meeting room was $200, then the charity can issue a tax receipt for $800. As well, the business can likely treat the $200 paid for renting a meeting room as a deductible business expense.

  • Use of vacation property

    The use of a property is not the same as the transfer of a property. However, if the charity pays for the use of the property and the owner of the property donates that money back to the charity, the charity can issue a tax receipt for the donation (known as a cheque swap).

    Example 1: Jane and Paul Proudfoot have a cottage in the Gatineau Hills. They donate a week at the cottage to a silent auction run by their favourite charity. Because the donation of use of the cottage is not a transfer of property, a tax receipt cannot be issued. However, if the charity paid for a week at the cottage and the Proudfoot's donated the payment back to the charity, a charitable tax receipt could be issued. Of course, the Proudfoot's would have to declare this as income, and so there may not be any net benefit to them.

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