CRA indicates that a deduction for services donated to an NPO could be offset by imputed barter income

CRA addressed the situation of a non-profit organization (the “NPO”) soliciting in-kind contributions of goods and services from local suppliers, e.g., landscaping services from a landscaper, with the supplier agreeing because it believed that it would benefit from word of mouth advertising and promotion that would result in increased revenues. CRA stated:

[I]f a self-employed landscaper barters landscaping services to a local non-profit organization in exchange for advertising and promotion for their business, the landscaper would be required to include in income the value of the services provided to the non-profit organization. The landscaper would then claim a deduction for advertising and promotion used in the business for the same amount as the total value of the services given up. Additionally, the landscaper could also generally deduct costs of materials, etc., incurred in providing the landscaping services.

Neal Armstrong. Summary of 6 January 2020 External T.I. 2019-0800941E5 under s. 9 – computation of profit.