30 July 1992 Income Tax Severed Letter 9219545 - Charitable Donation - Reimbursement of Expenditures

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.

921954
L. Holloway
24(1) (613) 957-2104

Attention: 19(1)

July 30, 1992

Dear Sirs:

Re: Reimbursement of Expenditures

This is in reply to your letter of January 20, 1992, concerning the reimbursement of expenditures by a charitable organization. In particular, you asked if a charity could issue a charitable receipt in lieu of reimbursement for an expenditure incurred by an individual on behalf of the charity.

Our Comments

In order for a taxpayer to be allowed a credit for a gift to a charity, he must first have made a gift to the particular organization. The word gift is not defined in the Income Tax Act and therefore it takes on its legal meaning which is "a voluntary transfer of property without valuable consideration and without expectation of return or compensation." No right, privilege, material benefit or

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advantage may accrue to the donor or to a person designated by him as a result of the donation. In the situation you have described, it is our opinion that consideration does flow back to the individual in the form of reimbursed expenditures . Consequently, the deductible portion of any contribution made by the individual would be reduced by the amount in lieu of reimbursed expenditures. Note that should a registered charity fully reimburse an individual's costs it can later accept the return of all or a portion of the payment as a gift; provided that it is returned voluntarily. If the individual is under moral or legal obligation to return a portion of the reimbursement, it is not a gift.

We trust this information 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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