The Budget proposes a new relieving measure related to the
application of the sales tax regime (whether GST or HST depending
on the province) to charitable donations. The measure will
effectively apply the split-receipting regime that applies to
charitable gifts for income tax purposes to the GST/HST regime.
Currently, where a donor makes a gift to a registered charity,
the gift is not subject to GST/HST provided that the donor does not
receive anything in return for the gift. If, however, the
donor receives property or services (referred to as a
"supply") from the charity in exchange for a donation,
the full value of the donation is generally (subject to various
exemptions) subject to GST/HST even if the value of the property or
services received is less than the value of the gift. It
appears that some charities may not have understood that
GST/HST was to apply in this circumstance.
The Budget proposes to revise the GST/HST rules to align them
with the split-receipting rules in the Income Tax
Act. Under the split-receipting rules, where a donor
makes a gift to a registered charity and receives some property or
service in return (referred to as an "advantage") an
official donation receipt may be issued for the value of the gifted
property less the amount of the advantage. This net gift
amount is referred to as the "eligible amount of the
gift". Budget 2016 proposes that where such a gift is
made, and provided that an official donation receipt can be issued
for an eligible amount of the gift, GST/HST will only apply to the
value of the supply received by the donor (assuming the property or
service is not otherwise exempt from GST/HST). The portion of
the donation in excess of the supply will no longer be subject to
The Budget confirmed that this new measure will apply to
supplies made after March 22, 2016.
There is also a transition provision addressing the application
of these new rules to GST/HST which may not have been collected
between December 21, 2002 (when the income tax split-receipting
rules came into effect) and Budget Day. Rather than being
subject to assessment for GST/HST on the full amount of any
donations made in this period, the Budget provides that any such
assessment will be calculated as follows:
if the value of the supply was less than $500, GST/HST will be
considered as paid;
if GST/HST was only collected on the value of the supply, no
further GST/HST will be assessed; and
in other cases, the charity will be required to remit GST/HST
on the value of the supply only (i.e., in other words, the new
relieving split-receipting rules will apply to determine the
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).