8 August 1994 External T.I. 9415135 - REIMBURSEMENT OF EXPENSES AS CHARITABLE DONATIONS

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 Department.

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

Principal Issues:

1.Whether a registered charity can issue receipts for expenses incurred by individuals who perform services on behalf of the charity.

2.Alternatively, whether the individuals can deduct the expenses as business expenses.

Position TAKEN:

1.Receipts cannot be issued.

2.Expenses cannot be deducted as business expenses.

Reasons FOR POSITION TAKEN:

1.The expenses incurred by the individuals would not constitute a gift since they do not constitute a voluntary transfer of property, even if the individuals have voluntarily contributed their time.

2.Expenses incurred by the individuals in providing services to the XXXXXXXXXX would not be allowed as they are not being laid out to earn income.

		5-941513
XXXXXXXXXX	C. Chouinard

Attention: XXXXXXXXXX

August 8, 1994

Dear Sir:

Re: Charitable Donations - Reimbursement of Expenditures

We are writing in reply to your letter of June 6, 1994, addressed to the Ottawa District Office, that was referred to us for reply.

You ask whether the XXXXXXXXXX a registered charity, can issue charitable receipts in respect of expenses incurred by individuals on behalf of XXXXXXXXXX. The receipts would be issued for that part of the expenses not reimbursed by XXXXXXXXXX Alternatively, you ask whether the individuals could deduct their expenses as business expenses.

In order to qualify as a charitable gift for the purpose of sections 110.1 and 118.1 of the Income Tax Act (the "Act"), the amount must, among other things, be a voluntary transfer of property given without expectation of return. In our view, the payment of costs that an individual has incurred in travelling does not constitute a voluntary transfer of property even if the individual has voluntarily contributed his time. There is, however, nothing to prevent the registered charity from fully reimbursing a delegate's reasonable travel costs and later accepting the return of all or a portion of the payment as a gift; provided that it is returned voluntarily. If the delegate is under moral or legal obligation to return a portion of the reimbursement, it is not a gift.

As regards your second question, any expenses incurred by the individuals in providing services to XXXXXXXXXX would not be allowed as they would not be laid out to earn income.

Unless as otherwise stated, all references to statute are to the Income Tax Act, S.C. 1970-71-72, c.63, as amended and consolidated to June 10, 1993.

We trust that these comments will be of assistance.

Yours truly,

R. Albert
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch

Encl.