Grants, subsidies, sponsorships, donations and gifts for charities

Donations and gifts

GST/HST does not apply to donations and gifts. A donation or a gift is a voluntary transfer of money or property for which the donor does not receive any benefit in return. However, if the donor receives property having nominal value, such as a key ring, a pin, or an envelope seal, in exchange for the donation, the donation will still not be subject to GST/HST. Conversely, if the donor receives a good or service having more than nominal value in exchange for the donation, the payment will be subject to tax, unless the good or service is otherwise exempt.

Grants and subsidies

As a charity, you may receive grants, contributions, subsidies, and similar payments. Often referred to as transfer payments, these are given for many different reasons, ranging from a simple contribution made to a charity, to major government-funded projects. Usually, when transfer payments are made in the public interest, or for charitable purposes, we do not regard them as payment for a supply and, as such, there would be no GST/HST on the payment.

Generally, GST/HST does not apply to grants and subsidies your charity receives. However, if there is a direct link between a payment you receive and a supply you provide to either the grantor of the transfer payment or to a third party, the transfer payment may be regarded as payment for a supply. If this is the case, the transfer payment may be taxable, and tax may need to be collected on the amount. Generally, this would not apply to a payment for services, since most services provided by a charity are exempt.

Since the tax treatment of transfer payments may be complex and will be determined on a case-by-case basis, call us or see GST/HST Technical Information Bulletin B-067, Goods and Services Tax Treatment of Grants and Subsidies, for more information.

Receipt of donations, grants, subsidies, and sponsorships do not affect your charity's entitlement to GST/HST rebates or input tax credits.

Sponsorships

Similar to donations and grants, sponsorships may not be subject to GST/HST, depending on the nature and the extent of the promotional benefits you give to the sponsor. These are examples of sponsorships that are not taxable:

• sponsorships when a business financially supports your activity in return for which you promote the business. For example, your charity organizes a softball team and you agree to feature a sponsor's trade name on your team uniforms. As another example, you run a sporting event and publish an acknowledgment of the sponsor in the event's program; and
• sponsorships when you receive funding in return for allowing the sponsor the right to use your charity's logo. For example, a corporation uses a national charity's logo in its advertising campaign.

We do not consider the payments you receive from a sponsor in either of these circumstances to be payment for a good or service. As a result, the payments are not subject to GST/HST.

If the payment by a sponsor is made primarily (more than 50%) to obtain advertising on television or radio, or in a newspaper, magazine, or other publication your charity issues periodically, then we do not consider the payment to be a sponsorship, but rather a payment for advertising services. Advertising services are usually subject to GST/HST. However, they are exempt when provided by a charity.

Forms and publications

• Guide RC4022, General Information for GST/HST Registrants
• Guide RC4082, GST/HST Information for Charities

Date modified:

2014-08-22