Glossary: B

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  • Depreciable property

    Depreciable property is a type of capital property, usually used to earn income from a business or property. It is property that is expected to decline in value, or be used over a number of years, such as vehicles, machinery, etc. The cost of this property can be "depreciated" (or "amortized") over a number of years.

  • Capital Property

    Description: Capital property includes depreciable property, and any property that, if sold, would result in a capital gain or a capital loss. Capital property does not include the trading assets of a business, such as inventory.

    Examples: The following properties are generally capital properties:

    • securities, such as stocks, bonds, and units of a mutual fund trust; and
    • equipment you use in a business or a rental operation.

    Capital property is normally valued at fair market value for tax receipt purposes. In some cases, however, the donor (not the charity) can choose a lower value. The donor can do this where their cost of the property for tax purposes (the "adjusted cost base") is less than fair market value. In this case, the donor may choose which value to use so long as it is:

    • no lower than the donor's adjusted cost base;
    • no lower than the value of any advantage; and
    • no higher than the fair market value.

    This rule lets donors choose how much capital gain (if any) they recognize for tax purposes on the donation of the capital property.

    Note: If the fair market value is less than the adjusted cost base, the donor does not have a choice: the fair market value must be used.

    For further information, see CRA's IT-288.

  • Real Property

    Description: Land, and buildings or other structures permanently attached to land.

    Examples: A family home, a cottage, or a vacant piece of land.

    The value of real property for tax receipt purposes is its fair market value. You should almost always get an appraisal or valuation from a professional real estate appraiser to support the gift.

    Real property located in Canada is not subject to the deemed fair market value rule, but property outside Canada is.

    Special case: For gifts of ecologically sensitive land, you should refer to the Canadian Ecological Gifts Program.

  • Personal use property

    Personal use property refers to items that you own primarily for the personal use or enjoyment of your family and yourself. It includes all personal and household items, such as furniture, automobiles, boats, a cottage, and other similar properties. It also includes listed personal property.

  • Listed personal property

    Description: Certain kinds of property that are intended for personal use or enjoyment and that typically increase in value over time.

    Examples: Jewellery, stamp and coin collections, and artwork.

    It is often difficult to establish a fair market value for listed personal property since many items are unique. To determine a value for these items, it is usually best to check with an appropriate dealer or to get a formal appraisal.

    If the estimated value of the property is more than $1,000, it is strongly recommended that you have the property appraised to support the value for tax receipt purposes.

    Special case: If your charity receives a gift of art or cultural property that is deemed to be of national significance and is donated by someone other than its creator, you should have it certified by the Canadian Cultural Property Export Review Board.

  • Lottery or raffle tickets

    CRA considers that donors who buy lottery or raffle tickets do so primarily because they want a chance to win the prizes that are offered and not because they want to make a donation to the charity that is holding the event. Therefore it does not allow tax receipts to be issued.

  • Gift Cards and Certificates

    Gift cards or certificates are often donated to charities and are commonly used in fundraising activities such as silent auctions.

    Tax receipts cannot be issued for a gift card or certificate if the donor is the business that issued it and if the gift card or certificate is redeemed by a third party (for example, by someone who purchased it in a silent auction). In this case, the gift card or certificate is considered only to be a promise by the business to give merchandise sometime in the future (that is, when the gift card is actually redeemed). Until then, there has been no gift of property. If the charity itself redeems the gift card or certificate for goods (not services), then a receipt may be issued, as the donor (the business) has then fulfilled its promise and transferred property to the charity.

    Tax receipts may be issued if the person who donates the gift card or certificate purchased it from the issuer and then donates it to a charity. Once purchased, the gift card or certificate is considered to be property and, if donated to a charity, is eligible for a tax receipt.

    The following table illustrates when a tax receipt may be issued in exchange for a gift card or certificate donated to a registered charity:

     

    Redeemed by ...

    Charity 3rd party

    Donated by ...

    Issuer (a business) Issue tax receipt Do not issue tax receipt
    3rd party Issue tax receipt Issue tax receipt

    Example 1: A book store donates one of its gift cards to a charity for use in its auction. Because the gift card is only considered to be a promise at the time of the donation, a tax receipt cannot be issued.

    When the card is redeemed by whoever purchased it at the auction, the charity still cannot issue a receipt. This is because the redemption transaction is between the book store and the purchaser. The charity is not involved in this transaction (and specifically does not receive any donation as part of the transaction), so no tax receipt can be issued.

    Example 2: A person buys a gift certificate for cooking classes from the cooking school and then donates it to a charity for use in its auction. The donor can receive a tax receipt for the full amount of the gift certificate because it is now considered to be property. The person who is giving the cooking classes does not get a receipt from the charity.

    See 'Gift certificates or gift cards' (CRA, 2014)