17 August 1992 Income Tax Severed Letter 9212475 - Charitable Donations - Reimbursed Expenses

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.

921247
      19(1)                                Glen Thornley
                                           (613) 957-2101

August 17, 1992

Dear 19(1)

Re: Charitable Donations

This is in reply to your letter of April 10, 1992 describing two situations involving, in one case, the donation of membership 24(1) and in the other, the donation of reimbursed expenses.

The Department's position with respect to deductible gifts is set out in Interpretation Bulletin IT-110R2 and the special release to that bulletin dated January 27, 1992 (copies enclosed for your information). In paragraph 3 of IT-110R2 it states that "A gift, for purposes of sections 110.1 and 118.1, is a voluntary transfer of property without valuable consideration." That paragraph goes on to say, with respect to contributions of service, that there is nothing to prohibit a charity from paying for services and later accepting the return of all or a portion of the payment as a gift, providing it is returned voluntarily. Similarly, there is nothing to prohibit a charity from issuing a cheque in payment of reimbursable expenses and later issuing a donation receipt for the return of all or a portion of that payment as a gift providing, as indicated previously, that the gift is made voluntarily.

With respect to the sustaining memberships and the earned "merit marks", as discussed over the telephone on August 14, 1992 (Thornley/ 19(1)), because the 24(1) carry no right of off-set or cash value they cannot be recognized as donations when a sustaining membership is purchased for24(1) at a time when a member may have earned 24(1) to his credit.

We trust our comments will be of assistance to you.

Yours truly,

E. Wheeler for Director Business and General Division Rulings Directorate Legislative and Intergovernmental Affairs Branch

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