What is a gift-in-kind? A gift-in-kind is a gift of any property excluding cash. Gifts-in-kind could include gifts of real property (land or buildings), personal use property (an item used in a personal rather than a business context, for example clothing), intangible property (investments), or intellectual property (patents, licenses).1 In order to issue an official income tax receipt for a gift-in-kind, an organization must first determine the fair market value of the gift, as well as the advantage the donor received for making the gift.2 “Determining the Value of Gifts” in the Gifts & Receipting section of Imagine Canada’s Charity Tax Tools contains tools, tips, and examples to help you ascertain the value of gifts-in-kind.
For Charities: Why must charities issue official income tax receipts for monetary gifts and gifts-in-kind? Charities must issue official income tax receipts for all gifts. In order to qualify as a “gift,” a donation must be voluntary and involve a transfer of property (cash, land, stocks, clothing, etc). In order to be eligible for a tax receipt, a gift must be able to be valued and must “enrich the charity.”3 Issuing improper or incomplete donation receipts is illegal under the income tax act and can incur consequences from CRA,4 impacting an organization’s charitable status as well as its reputation in the broader community.
What must be included on an official income tax receipt? To be acceptable to CRA, official income tax receipts must include:5
- a statement that the receipt is an official receipt for income tax purposes;
- the name and Canadian address of the charity that are on file with the CRA;
- the charity's charitable registration (business) number;
- the serial number of the receipt (all receipts must be numbered);
- the place where the receipt was issued;
- the date the donation was received;
- the date on which the receipt was issued if it differs from the date of donation;
- the full name and address of the donor;
- the eligible amount of the gift;
- the signature of an individual authorized by the charity to sign receipts; and
- the name and Web site address of the Canada Revenue Agency (www.cra-arc.gc.ca/charities).
Receipts for gifts-in-kind must also contain:5
- a brief description of the property transferred to the charity; and
- the name and address of the appraiser (if the property was appraised).
For Nonprofits: Why should nonprofit organizations make it clear to potential donors that they cannot issue Official Income Tax receipts? The general public may not be aware of the difference between a registered charity and a nonprofit organization. As such, they may assume that they are able to receive an Official Income Tax receipt from a nonprofit, and their decision to donate may be influenced by this assumption. In order to avoid misleading potential donors, nonprofits must make it clear that they cannot issue income tax receipts for donations.
From "Accreditation Preparation Workbook Section C: Fundraising," Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.
- “Gifts in Kind” in Gifts & Receipting, Imagine Canada Charity Tax Tools, 2009.
- “Determining the Value of Gifts” in Gifts & Receipting, Imagine Canada Charity Tax Tools, 2010.
- “Is a gift eligible for a receipt” in Gifts & Receipting, Imagine Canada Charity Tax Tools, 2010.
- “Fundraising by Registered Charities: Guidance,” Canada Revenue Agency, April 20th 2012.
- Excerpted from: “Information included on a receipt” in Gifts & Receipting, Imagine Canada Charity Tax Tools, 2010.
Standards Reference Guide