General guidelines for issuing receipts applicable to all fundraising events or activities
The value of any complimentary benefits provided to all participants for attending a fundraising event (for example, pens and key chains) and the value of door and achievement prizes that all attendees could receive by simply attending the event must be totalled and allocated on a pro rata basis to all participants. The allocated value of complimentary benefits must be deducted from the fair market value of the gift before a receipt can be issued for the eligible amount of the gift, unless the de minimis rule can be applied.
For the purpose of applying the de minimis rule, complimentary benefits, such as door prizes and achievement prizes should be calculated separately from "main event" benefits, for example, the meal at a fundraising dinner, concert tickets, the green fees and cart rentals at a golf tournament, etc. The calculation should be done as follows:
- If the complimentary benefits fit within the de minimis threshold, then only the fair market value of the "main event" benefits should be deducted from the fair market value of the gift to determine the eligible amount of the receipt.
- If the complimentary benefits do not fit within the de minimis threshold, then the value of both the complimentary benefits and the main event benefits must be deducted from the fair market value of the gift to determine the eligible amount of the receipt.
The attendance of celebrities at fundraising events will not be viewed as an advantage per se. However, any incremental amount paid for the right to participate in an activity (for example, dinner, golf) with a particular individual will not be viewed as a gift.
How does a registered charity determine the fair market value (FMV) of a fundraising dinner?
To determine the fair market value of a fundraising dinner, the value of a comparable meal provided by a comparable facility will have to be established. If the event is held at a restaurant, then the price the restaurant would charge a regular customer is the comparable value. In this regard, it is acceptable to take into account group or banquet rates.
Can an official donation receipt be issued for the purchase of a lottery ticket?
It is the view of the Canada Revenue Agency (CRA) that no part of the cost of a lottery ticket is a gift. Therefore, a lottery ticket is not eligible for an official donation receipt.
How does a registered charity determine the FMV of concerts, shows, and sporting events?
Where the amount of the advantage (including the usual and current ticket price) is 80% or less of the actual ticket price, a tax receipt may be issued for the difference. If there is no reasonably comparable event, then no portion of the ticket price can be viewed as an eligible amount for receipting purposes.
How does a registered charity determine the FMV of the advantages at a golf tournament?
- Green fees are calculated at the rate (group or individual) normally charged to non-members playing the course at the time of the event. However, no amount is allocated to members where members are not normally required to pay green fees.
- Cart rentals are valued at their regular cost.
- Meals are valued at the price (group or individual rates) that would be charged if the meals were purchased separately at the course.
- Complimentary items are valued at the amount that would have to be paid to acquire the merchandise at the donating retail outlet or the outlet from which the merchandise was obtained.
- Door and achievement prizes are valued at the retail value of all such prizes, totalled, and allocated pro rata to all attendees.
- Hole in one prizes can be excluded. The CRA accepts that for any particular participant the value of the chance to win the prize is nominal.
Can official donation receipts be issued for property donated for sale at an auction?
Yes. However, the fair market value of the property must be determined before a receipt can be issued. Also, keep in mind that gifts of services, for sale at an auction or otherwise, are not eligible for an official donation receipt.
Can a successful bidder at an auction be issued an official donation receipt for the amount in excess of the fair market value that he or she pays?
Yes. However, it must be possible to determine the item's fair market value, and that value must be posted before the start of the auction. Also, for an official donation receipt to be issued, the fair market value of the property the bidder receives cannot exceed 80% of the purchase price.
The foregoing scenarios are covered in greater detail in Income Tax Technical News, Issue 26.
- CG-013, Fundraising by Registered Charities
- Registered Charities Newsletter No. 23 - Summer 2005
- Registered Charities Newsletter No. 24 - Late Summer 2005
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