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.
Revenue Canada ExciseInterpretation and Service 7th Floor 4576 Young Street North York, Ontario M4T 2L7
Attention Pat Kendle
September 20, 1991
Dear Sirs:
Re: Official Donation Receipt Issued by a Cultural Institution
We have been asked to reply to a question posed to you by 19(1) 19(1) on April 18, 1991, concerning the valuation of art as it relates to the donation receipt which is issued for income tax purposes.
The question was posed as follows:
"If a corporation or individual donates a work of art to a public cultural institution, does the tax receipt reflect the fair market value plus the original GST paid on the original purchase?"
We understand that you have already replied to 19(1) based on a verbal response given to you by a representative of our Department. We would like to provide you with the following additional comments to clarify our position:
Where a person donates property to a registered charitable organization or to Her Majesty in right of Canada or a province, an official receipt is issued for income tax purposes. If the gift is property other than cash, the amount of the receipt will be recorded at the fair market value of the property at the time the gift was made.
The amount recorded on the receipt does not include the amount of GST paid on the original purchase. In fact, the fair market value of property at a particular point in time does not include any costs incurred by the donor. The determination of the fair market value of the gift is made by a qualified appraiser, or in the case of a gift with a fair market value of less than one thousand dollars, by a qualified staff member of the recipient institution.
The fair market value of a property has been defined in the courts as the highest price expressed in term's of money or money's worth obtainable in an open and unrestricted market, between informed prudent parties who are dealing at arm's length and who are under no compulsion to act. Consequently, an arm's length transaction (a transaction between unrelated parties) in respect of the property or a similar property at or near the effective date of valuation may aid an appraiser in making a determination of the fair value of a particular property. However, additional amounts payable to other parties, such as taxes to government authorities or commissions to sales agents are not relevant to this determination of fair market value.
In some circumstances a donor may be able to elect to use a value other than the fair market value for the purpose of the non-refundable income tax credit; however, the amount of the gift recorded on the receipt would remain unchanged.
We trust our comments will be of assistance to you.
Yours truly,
for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
cc: Charities Division, Registration Directorate cc: H.L. Jones, General Tax Policy, Goods and Services Tax
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© Her Majesty the Queen in Right of Canada, 1991
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© Sa Majesté la Reine du Chef du Canada, 1991
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