Nonprofits north of the border know that Canadian tax receipting comes with a lot of complex rules. In this blog post from TechSoup Canada, get an overview of six details you may not be aware of.
Canada Revenue Agency regulations are complicated, but they play a big role for our nonprofits. Receipts from gifts made to your organization are vital as they can be used for deductions on a donor’s income tax filings. However, these receipts come with several rules and requirements.
Accurately creating and issuing them to supporters can be difficult and time-consuming. With the right knowledge and technology, though, they can be a simple way to continue delighting donors. With that in mind, here are six Canadian tax receipting tips you may not be familiar with:
1. Receipts must be written in the payee’s name
It can be common for an individual to donate to your nonprofit on someone else’s behalf. Perhaps a parent contributes on behalf of a child or a business owner donates for the company.
Regardless of the name the donation is made under, the receipt should be issued to the payee. This information can be captured from the billing information on a gift, rather than the donor name provided.
2. Canadian tax receipting needs to account for ‘advantages’
Some donations will come with a benefit to the contributor. For example, your nonprofit may be running a campaign where donors who give more than $100 receive a t-shirt, raffle ticket, or bobblehead. When it comes to tax receipts, these are considered ‘advantages.’ Their value is to be subtracted from the amount donated, and thus reducing the net amount on the tax receipt. So if a donor gives $100 and receives a $10 ‘advantage’, they would receive a tax receipt for $90.
Fundraising event tickets typically work the same way. If a ticket costs $250 and includes $100 of advantages – such as food, entertainment, etc. – then the purchaser would receive a receipt for the net amount of $150.
When creating your tax receipts, these advantages should be clearly described and have their value stated.