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:
Whether a tax receipt can be issued for donations of inventory.
Position:
Yes.
Reasons:
Receipts can be issued for gifts in kind, which include inventory.
C. Chouinard
XXXXXXXXXX 4-961130
May 23, 1996
Dear XXXXXXXXXX:
We are writing in response to your request for additional information regarding donation programs whereby corporations donate unwanted or obsolete inventory to various institutions.
As we indicated in our letter dated April 3, 1996, we are not aware of donation programs similar to the one described in the brochure that was attached to your March 7, 1996 letter. Accordingly, we can only offer you the following general comments.
As indicated in paragraph 3 of Interpretation Bulletin IT-297R2, a copy of which is enclosed, gifts in kind, including inventory of a business, can be made to a charity. Generally, where property is donated to any person, the donor is deemed to have received proceeds equal to the fair market value of the property and must, if the property gifted is inventory, account for any income under section 9 of the Income Tax Act. The charity receiving the inventory would issue an official receipt for tax purposes in an amount equal to the fair market value of the inventory as of the date of the donation. You should note, however, that property of little or only nominal value to the donor will not qualify as a gift in kind.
We trust these comments will be of assistance.
Yours sincerely,
R. Albert
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
Encl.
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