Glossary: D

Director of Research, Imagine Canada

David has been with Imagine Canada for 13 years. Over this time, he has been involved with a number of surveys, most notably the Canada Survey of Giving, Volunteering, and Participating (CSGVP) and the National Survey of Nonprofit and Voluntary Organizations (NSNVO). He has also worked extensively with data from the T3010 returns that charities file with CRA.

Most recently he has been leading Imagine Canada's Sector Monitor Program which regularly surveys charity leaders to assess the current "state of the sector" and explores key emergent issues of interest to the sector.

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.

Directors and trustees are persons who make up the registered charity's elected or appointed governing body. This generally means persons who hold positions identified in the registered charity's governing documents, such as chair, treasurer, secretary, or past president. The registered charity's governing board includes all its directors and trustees.

(CRA : Charities Glossary)

The disbursement quota (or DQ) is the minimum amount a registered charity has to spend on charitable activities or gifts to qualified donees to keep its registered status.

A donor cannot specify the ultimate beneficiary of a gift, and the gift generally cannot benefit the donor or anyone who is not at arm’s length from the donor. That is, there can be no private benefit. If either of these conditions apply to the gift, CRA does not allow the charity to issue a tax receipt.

Example 1: A donor gives $1,000 to a charity for the specific purpose of funding Jean David’s attendance at a music course given by the charity. For a donation to be eligible for a tax receipt, the charity must be able to freely apply the funds within a program (the music course) or within other similar programs at its discretion. In this case, the donor has directed specific individuals on whom the funds must be spent. Therefore no tax receipt can be issued.

Example 2: A donor gives $1,000 to a charity specifically to help reduce the cost of offering a music program. The charity is then able to lower the fees it charges its students. Because the donor has not directed that the donation is to be used for a specific individual, it is eligible for a tax receipt.

Example 3: A donor gives $1,000 to a charity specifically to fund a bursary program to help disadvantaged youth participate in a music program. The charity sets the criteria and selects the students to be supported. Because the donor has not directed that the donation is to be used for a specific individual, it is eligible for a tax receipt.

Example 4: A donor gives $10,000 to benefit the family of a specific victim of a traffic accident. Because particular individuals have been identified by the donor, it is not eligible for a tax receipt. If the donation was instead intended to benefit any victim of a traffic accident, it would be within the charity’s discretion as to how to apply it, and therefore a tax receipt could be issued.

Donations that are primarily intended to benefit the individual making the donation are not eligible for a tax receipt. Benefits to the donor can include:

• admission fees to concerts or other performances;
• tickets to attend events where a meal is served or entertainment is provided;
• events that include auctions, lotteries, or draws;
• provision of services, such as the use of a charity’s premises or meeting facilities; and
• recognition for sponsors.

In some conditions, however, a receipt can be issued for a part of the payment (see Split Receipting for more information and examples).

A charity may generally not issue a tax receipt for the gift of shares or securities of a corporation unless they are publicly traded on a “prescribed stock exchange” or if the donor is at arm’s length from the charity and each of its director and officers. This is a complex area of the regulations, however. You should get professional advice or ask CRA if you are in this situation.

Contributions of services (for example, time, labour, skills) are not transfers of property and therefore are not gifts. No tax receipt may be issued for the contribution of services.

See 'Gifts of Services' (CRA, 2011)

However, if the charity pays for the services provided, the service provider may then donate that payment to the charity. In this case, this is considered to be a cash donation and the charity can issue a tax receipt to the donor. This is sometimes called a cheque swap.

Example 1: A charity maintains a roster of volunteers to drive seniors to various appointments, to shopping, etc. The volunteers’ time is a gift of services. Therefore no tax receipt can be issued.

Example 2: A gardener offers to voluntarily take care of a charity's lawn and garden. No tax receipt can be issued for the provision of this service. But if the gardener decides to invoice the charity at her normal prices for such work and the charity pays this invoice, the gardener may then choose to donate all or part of the payment to the charity. The charity can then issue a tax receipt for this cash donation. Of course, the gardener would have to declare the amount invoiced as income for tax purposes, so there is likely no net benefit to her in doing so.

Caution: For a donation to qualify for a tax receipt, there must be an actual cash donation. Funds must actually change hands.

Charities cannot issue tax receipts for donations when:

• the donor was required to make the donation (for example, as the result of a court order) or
• the donor was induced in any way to make a donation that he or she otherwise would not have made.

In these cases, the donation is not considered voluntary, and therefore is not a gift.

Example 1: As part of a settlement in a court case, the loser in the case is required to make a donation to charity. Because the donation did not meet the definition of a gift (it was not voluntary), no tax receipt can be issued.

Example 2: A charity contacts a potential donor and proposes the following: Consistent with its charitable objects, the charity is able to provide relief to farmers, although it has no program set up to do so. The charity knows that the potential donor is interested in helping a specific farming family, so it offers to provide a program for which only this family would qualify if the donor donates to the charity. Although the donor does not receive any personal advantage for his donation, he has been induced to make his gift. Therefore no tax receipt can be issued.

A donee is the recipient of a gift. See also "qualfied donee" and "eligible donee".

A person, foundation, or corporation that makes a gift.