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.
Principal Issues:
Whether a receipt under the Income Tax Act can be issued to persons purchasing tickets in respect of a fundraising raffle held by a political party.
Position: No.
Reasons:
Is it arguable that the eligible amount of the monetary contribution is nil on the basis that the amount of the advantage in respect of the contribution is equal to the amount paid for the raffle ticket.
2007-024431
XXXXXXXXXX Helen Zelobowski
(519) 571-6987
April 17, 2008
Dear XXXXXXXXXX :
Re: XXXXXXXXXX Political Party Fundraising Raffle
We are writing in response to your e-mail dated July 6, 2007 enquiring whether a receipt under the Income Tax Act (the "Act") can be issued to persons purchasing tickets in respect of a fundraising raffle held by a political party.
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 of an advance income tax ruling request submitted in accordance with the guidelines established in 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.
Draft legislation in the "Act" provides for the deduction from tax of a portion of the total eligible amount of a monetary contribution to a registered party, a provincial division of a registered party, a registered association or a candidate, as those terms are defined in the Canada Elections Act. As stated in paragraph 7 of Information Circular 75-2R7, dated June 10, 2004, receipts for income tax purposes must not be issued for more than the eligible amount of the monetary contribution.
Proposed subsection 248(31) of the "Act" defines the eligible amount of a monetary contribution as the amount by which the fair market value of the property that is the subject of the monetary contribution exceeds the amount of advantage, if any, in respect of the contribution. Under proposed subsection 248(32), the amount of the advantage in respect of a monetary contribution is generally the total value of all property, services, compensation or other benefits the individual making the contribution is entitled to.
The advantage in respect of the monetary contribution made by a participant of a fundraising raffle held by a political party is the chance to win the prize. It is arguable that the amount of this advantage is equal to the amount paid for the ticket, in which case the eligible amount of the monetary contribution is nil and no part of the cost of the raffle ticket is a monetary contribution which may be receipted for income tax purposes.
We trust that these comments will be of assistance.
Yours truly,
F. Lee Workman
Manager
Charitable and Financial Institutions Sectors
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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