CRA indicates that a charity gets a better GST/HST result if it exchanges cash with volunteers who donate their expenses
Some of the volunteers at a registered charity are reimbursed for their expenses, or receive an allowance – but then donate those payments to the charity for a donation receipt. CRA stated:
The payment of the reimbursement or the allowance by the Charity and the later donation of all or part of this amount back to the Charity are two separate transactions for GST/HST purposes.
Accordingly, the expenses claimed by the charity for public service body (PSB) rebate purposes include the expenses recognized under ETA s. 175 or 174 as a result of its having paid the reimbursements or allowances – notwithstanding that those expenses in effect are donated back to it.
This contrasts with the situation where no cash is exchanged and the volunteer simply incurs the expenses as a gift-in-kind to the charity and is issued a receipt for the value of this in-kind donation. CRA stated that since “the Charity does not actually pay an amount to the volunteer,” ETA s. 175 and, therefore, the PSB rebate, is unavailable.
Neal Armstrong. Summary of 18 May 2018 Interpretation 183321 under ETA s. 175(1).