28 August 2003 External T.I. 2003-0008495 - SPLIT RECEIPTING GUIDELINES

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: We are asked to comment on charitable receipting in respect of particular fundraising activities.

Position: General Comments only.

Reasons: N/A

XXXXXXXXXX 								2003-000849
R. Maley
August 28, 2003

Dear XXXXXXXXXX:

Re: Split-Receipting Guidelines

This is in reply to your memo of March 7, 2003 requesting our comments on activities you are contemplating to raise funds for charity. In particular, you ask whether certain amendments proposed in December 2002 to the Income Tax Act ("the Act") would apply to permit a charity to issue donation receipts to participants in your fundraising activities as described in your memo.

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an Advance Income Tax Ruling request submitted in accordance with Information Circular 70-6R5. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to provide the following comments.

In general, a "gift" for purposes of the Income Tax Act ("the Act") means a voluntary transfer of the donor's property without valuable consideration to the donor. Proposed amendments to the Act will allow the Canada Customs and Revenue Agency (CCRA) to recognize a gift, for tax purposes, in certain circumstances where a donor receives consideration or other advantages for property transferred to a registered charity or other qualifying donee after December 20, 2002 ("the draft legislation"). The CCRA has issued proposed "Guidelines on Split-Receipting" ("the Guidelines") in Income Tax Technical News No. 26 to explain to taxpayers how the draft legislation will apply in specific common gifting situations. These Guidelines are available on the CCRA website at http://www.ccra-adrc.gc.ca/tax/technical/incometax/itnews3-e.html.

An individual's participation in a fundraiser for the benefit of a charity may or may not result in the individual making a gift to the charity. For example, the donation of one's time or services does not result in a gift as there is no transfer of property to the charity from the donor. Similarly, the purchase of donated property or raffle tickets generally does not result in a gift to the charity as the purchaser is receiving consideration for the amount paid.

Should an individual choose to pay more than fair market value for a property or other advantage in order to benefit a charity, a gift may be recognized for tax purposes if the value of the consideration and other advantages to the individual fall within the limits stipulated in the draft legislation. Reference may be had to the Guidelines in this respect.

A charity should issue a receipt only where it is satisfied that it has received a property that, taking into account proposed subsection 248(32) of the draft legislation, constituted a gift at the time that the property was received. If a receipt is issued, the receipt should indicate the fair market value of the property at the time of the gift (see section 3501 of the Income Tax Regulations) and the eligible amount of the gift pursuant to the draft legislation. Under no circumstances may a charity issue a receipt to a donor reflecting an amount in excess of the fair market value of the property gifted by the donor. Accordingly, tax receipts cannot be auctioned. A charity may issue donation receipts only to the donor of gifted property. For example, donations from different donors cannot be pooled for receipting purposes. Reference may be had to Policy Commentary CPC-010 issued by the CCRA Charities Directorate in this regard. It is available on the CCRA website at http://www.ccra-adrc.gc.ca/tax/charities/policy/cpc/cpc-010-e.html.

While the foregoing comments are not binding on the CCRA, we trust that they are helpful.

Yours truly,

For/F. Lee Workman
Manager
Financial Institutions Section
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch