It’s that time of year again, and we know how year-end tax receipting for Canadian nonprofits can be a major challenge.
There are many cases where tax receipts from single gifts are issued as soon as it is processed. But in other cases, often for recurring donations, a year-end consolidated receipt is preferred.
These tax receipts are not only crucial to accurately produce for your supporters, who can use them to claim a tax credit, but the Canada Revenue Agency also has specific requirements your organization needs to meet.
What does your nonprofit need to know to get your year-end tax receipts right? We have the answers:
Who gets a consolidated tax receipt
A standard tax receipt can be issued as soon as a donation is processed, but may not be ideal for recurring gifts. Since the transactions occur multiple times throughout the year, your organization and/or your donor may prefer a consolidated receipt that summarizes every payment made.
A best practice is to give your recurring donors this option. This allows them to choose to receive a receipt immediately after a gift is processed or a single summary at the year-end.
As a reminder, Canadian regulations say that the individual who pays for a donation should always be the one who receives the receipt. It is the payee who can claim the donation, even if made on someone else’s behalf.
What the receipt should include
The CRA’s detailed guidelines for tax receipts can be found here, but the key details are:
- Your donor's name
- Your nonprofit's name and charitable registration number
- Date of each gift received
- Amount of each gift received
- The advantage amount associated with each gift*
- Description of the advantage
- Eligible gift amounts
- Receipt issued date
- Receipt issued address
- Authorized signature on behalf of your organization
*Donors may receive an advantage, or benefit when they contribute to your organization. For example, you may offer a free t-shirt for every donation of $100 or more. This t-shirt has a real value, which is the “advantage” the donor receives. If the t-shirt is an advantage worth $10, then the remaining eligible gift amount is $90. This is the ultimate value that your donor can claim on their tax returns for that donation.
When to issue Canadian year-end tax receipts
While there are no official rules about when a tax receipt must be issued to your donor, there are some best practices.
You will typically want to issue single gift tax receipts as soon after the transaction as possible. This tells your donor that it has been accurately received. When a consolidated receipt will be issued at the end of the year, you should still send a timely acknowledgment when every gift processes.
Consolidated receipts, which summarize the gifts made in a year, should be issued after the new year has begun. They should be sent out by February 28th so that the donors can claim them on their tax returns.
How Causeview helps Canadian nonprofits issue year-end receipts
Causeview Fundraising – donor management and gift processing built for Salesforce – makes year-end tax receipting simple for Canadian nonprofits.
With just the click of a button, you can have consolidated receipts created for every donor who requires one, including every gift that doesn't have one. Coupled with seamless transaction processing and gift accounting, Causeview can help ensure that you never worry about year-end tax receipting again.