Canada: Mandatory Requirements For Receiving Charitable Donation Tax Credit - February 25, 2016

As registered charities, school boards and school foundations are able to issue tax receipts for donations received, but in doing so must strictly adhere to Canada Revenue Agency requirements, in order to avoid risking revocation of their charitable status.

In the recent decision of Bope v. The Queen, the Tax Court of Canada confirmed the requirements for a charitable donation tax credit, stating that entitlement to the credit depends on the donor proving, on the balance of probabilities, that:

(a) there was a gift; and
(b) there was a receipt to prove that the gift was a charitable donation.

(a) Proof of a Gift

Mr. Bope stated in oral evidence that in the 2009 tax year he had gifted cash donations to a religious charity in excess of $10,000, although he had earned only $40,000 that year, and his bank records indicated that he was consistently in overdraft.  The Court concluded that Mr. Bope had not met the burden of establishing on the evidence that he had actually made the gift claimed.

(b)  Validity of Receipts

Income Tax Regulation 3501(1) (the "Regulation") lists the information that must be included in a charitable tax receipt (reproduced below), and states that every receipt must clearly show the required information.  Following other recent decisions (see: Afovia v. The Queen, Mapish v. The Queen, Sowah v. The Queen), the Court interpreted this language as requiring that a receipt must include all of the prescribed items contained in the Regulation.

With respect to Mr. Bope's receipt, the Court specifically found that the location at which the receipt had been issued was unclear from the document, noting that it should not be presumed that a receipt has been issued from an organization's corporate address.  In this respect, the charity failed to comply with the requirements of the Regulation.

Charitable foundations must remember that the Court will not necessarily consider the knowledge, intent, fault, liability, negligence, or good faith of a charitable organization in determining statutory and regulatory compliance.  The legislation requires only that the Court inquire as to whether all of the mandatory information has been included on the face of the receipt.  Where any one of the required elements is missing, the receipt will be invalid and the charitable donation tax credit will be disallowed.

Income Tax Regulations, Section 3501(1)

Every official receipt issued by a registered organization shall contain a statement that it is an official receipt for income tax purposes and shall show clearly in a manner that cannot readily be altered,

(a) the name and address in Canada of the organization as recorded with the Minister;
(b) the registration number assigned by the Minister to the organization;
(c) the serial number of the receipt;
(d) the place or locality where the receipt was issued;
(e) where the gift is a cash gift, the date on which or the year during which the gift was received;
(e.1) where the gift is of property other than cash

(f) the date on which the receipt was issued;
(g) the name and address of the donor including, in the case of an individual, the individual's first name and initial;
(h) the amount that is

(h.1) a description of the advantage, if any, in respect of the gift and the amount of that advantage;
(h.2) the eligible amount of the gift;
(i) the signature, as provided in subsection (2) or (3), of a responsible individual who has been authorized by the organization to acknowledge gifts; and
(j) the name and Internet website of the Canada Revenue Agency.

Foundations may also find these recent Miller Thomson articles helpful:

CRTC Releases Guidance on CASL's Application to Registered Charities

Police Record Checks Reform Act, 2015: Potential Impact on School Boards

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.