Sometimes a charity acknowledges a donation with some sort of advantage. Common examples include providing a donor with complimentary tickets to a performance, or providing anyone who purchases a ticket to a fundraising event with a catered meal. In cases like these, where the patron is both making a gift and buying something, it is possible that only a portion of the amount of the donation would be eligible to be tax receipted. This is called split receipting.

Anytime a donor receives an advantage, the charity must deduct the value of the advantage – (click here for information on calculating fair market value) – from the amount of the donation and determine whether split receipting is necessary. The donation, less the advantage, must still represent a voluntary transfer of property by the donor to the charity.

Sometimes, even when a donor receives an advantage, split receipting is not necessary. It is important to remember the following:

• The 80% rule – If the advantage the donor receives is valued at more than 80% of the amount of the donation, the CRA does not consider the donor as having intended to make a gift and the charity cannot provide a tax receipt at all.
• The de minimis rule – Some advantages are too small to warrant split receipting. The de minimis rule dictates that if the value of an advantage (or combined advantages) does not exceed the lesser of $75 or 10% of the value of the gift, it is too minimal to have any effect on the amount of the gift. In these cases, a charity can issue a tax receipt for the full amount of the donation.

Visit this page on the CRA website for information on split receipting.

Open this FAQ in its own tab to comment

Tags: Canada Revenue Agency (CRA), Donations, Receipting, Tax and Law