Charitable Receipts

Issuing Charitable Receipts Guidelines & Requirements

The Arthritis Research Foundation (ARF) will be pleased to issue charitable tax receipts upon request in compliance with the applicable rules & regulations of Canada Revenue Agency (CRA). Our strict adherence to these rules and regulations is crucial to protecting the charitable status of the Foundation.

It is very important that you understand all of the rules about tax receipts, as they are explained in the following document, BEFORE you start planning your event.

It is your responsibility to share the information in this document and communicate decisions surrounding tax receipting to your entire event committee so they are able to discuss in detail with event sponsors, donors, participants, etc. what you can and cannot offer.

Please review the following points carefully.

In general, if an individual or corporation is receiving any “benefit” for their donation or contribution, then a tax receipt is not usually issued. Benefits could include: dinner, alcohol, chance to bid on auction items, entertainment, parking, etc. There are some exceptions to this, as described further.

General Tax Receipt Information

  1. The Arthritis Research Foundation can provide tax receipts only if the funds raised from the event have been received and the following conditions are met:

  2. You have submitted a completed ‘Event Proposal & Budget’ form and received formal approval, in the form of an endorsement letter, from the ARF Special Events Department.

  3. Terms and conditions have been discussed and agreed upon based on the requirements applicable to your specific type of event.

  4. The required tax receipt information and funds have been received in the preferred format within 45 days of your event.

  5. Donations or Net Receiptable value are $15.00 or greater.

  6. The tax receipt is being issued to the person who made the donation (unless the cheque issuer acts as a donation collector and issues a complete list of donor details and amount given)

  7. The specific rules and regulations that apply for different types of events are followed.

  8. The total value of issued receipts cannot exceed the net proceeds of the events.

Please Note: A business gift letter can always be provided to sponsors or other corporate contributors as proof of payment. Most companies prefer to claim contributions as business expenses.

INDIVIDUAL CONTRIBUTIONS

Individuals can give in the following ways:

Donations and Pledges

  • If money or a “pledge” is given directly to ARF, in the form of a cheque or cash donation, then we can issue a charitable receipt to the person who gave the donation.
    • The donation must be $5.00 or greater to receive a tax receipt.

    • The full name and address (including postal code) and the amount given must be submitted.

Auction Purchases

If someone purchases an item at an auction, they are receiving a benefit (the purchased item, as well as the opportunity to participate in the auction) for their money and thus a tax receipt will not be issued.
 

Purchase of a Ticket or Entrance Fee to an Event

  • The person is receiving a benefit in return for the donation, thus a tax receipt is not usually issued.

  • The exception to this is if the ticket or entrance fee price exceeds the fair market value (FMV) advantage of the event. The difference between the ticket price and the advantage should be a minimum of 20% of the ticket price or $15, whichever is higher. The FMV would include: any products or services, entertainment, food and drinks, or any other benefit to the participant. The benefit calculation should include value of all donated goods or services provided and used for the event. For example: If someone buys a gala ticket for $200 and the FMV of the show, gift, food and drinks is $125, then a tax receipt can be issued for $75.00 (the part of the ticket price that reflects the true donation beyond the value of the gala).

  • If you anticipate requesting individual receipts for event participants for a calculated charitable donation portion of your set ticket price (differentiated from “fair market value” of the event). This amount must be discussed with your assigned member of the AARC Foundation Team before you can make any commitment to your event participants to ensure compliance with all CRA regulations.

Gift in Kind Donations

  • Gift-in-Kind receipts can be issued at lower of the FMV or the cost of the material goods, if the donors acquired the goods less than three years before the gift date or if the donors acquired the goods with the intention to donate.

  • If an individual donates an item, the donor:

    • Must provide proof of cost of purchase

    • Needs to establish the fair market value of the goods. This can be done by:

i. Having an independent third party appraise and value the item for items not auctioned plus provides a purchase invoice or other proof of purchase.

ii. For items used for auction at the event, the auction proceeds will be considered as fair market value.

Donation of Services

  • A tax receipt cannot be issued for any personal services including legal, entertainment, transportation, dining services or rental of vacation properties.

CORPORATE CONTRIBUTIONS


Corporations can give in the following ways:

Sponsorships, Donations and Pledges

  • If the contributor is a corporation, 100 per cent of the contribution is deductible as a business promotional expense. If the corporation receives no benefits (i.e. advertising in a brochure, logo recognition, tickets, etc.), a business receipt (letter of acknowledgement) can be issued at the request of the corporation.

Businesses Donating Inventory

  • Businesses can deduct the original cost of the inventory as a business expense and not lose the tax benefit associated with the transfer of property.
  • The Foundation can provide the donor with a business receipt (letter of acknowledgement) stating the value of the gift (requires invoice marked paid to be issued by the business). This can be used to write off the inventory donation. 

Gift in Kind Donations

  • Businesses can deduct the cost of the donated items, as a business expense and not lose the tax benefit associated with the transfer of property.
     
  • The Foundation can provide the donor with a business receipt (letter of acknowledgement) stating the value of the gift (requires proof of original cost paid by the business)

Donation of Services

  • Tax receipts cannot be issued for services provided, including; personal, professional, or legal services.

Fair Market Value

  • Fair market value is “the highest price, expressed in a dollar amount that the item would bring, in an open and unrestricted market, between a willing buyer and a willing seller who are knowledgeable, informed and prudent and who are acting independently of each other”.
     
  • Fair market value does not include taxes, commission, etc.
     
  • If the fair market value cannot be established (e.g., what is the value of meeting a celebrity?), then a tax receipt cannot be issued.
     
  • Even if a sponsor has paid to cover costs, or has donated or discounted the price of the entertainment, food, etc., the same rule applies and only the price beyond the fair market value would apply for a tax receipt.
     
  • A complete list of all benefits to the participants and their value must be included in your documentation in order for tax receipts to be issued. Your “benefits” list must also include items and services donated or discounted for the event.

Donations of Artwork

Gifts in Kind rules would apply to donation of artwork. Additional information required for donations of artwork:
  • A list of credentials for the appraiser
     
  • A history of the artist
     
  • A description, picture and history of the piece of artwork including significant points of reference
     
  • The methodology used to value the artwork
     
  • Reference to recent market purchases used to substantiate market value
     
  • Proof of the date of acquisition and costs of purchase of the artwork.
     
  • One page boiler plate appraisals, e-mailed appraisals, scribbled appraisals, or appraisals written in pencil are not valid.
     
  • Appraisals must be signed by the appraiser.

Donations of Wine

Gifts in Kind rules would apply to donation of wine. The following additional information is required for donations of wine:
  • A list of credentials for the appraiser • A description of the wine donated and its physical state or other relevant conditions
     
  • The methodology used to value the wine
     
  • Reference to recent market purchases used to substantiate market value
     
  • Proof of the date of acquisition and cost of purchase of the wine
     
  • One page boiler plate appraisals, e-mailed appraisals, scribbled appraisals, or appraisals written in pencil are not valid. Appraisals must be signed by the appraiser.