Canada Revenue Agency Gift Guidelines

With clients around the world, CharityEngine must keep a finger on the pulse of international regulations. While certifications like PCI and SOC 2 are commonly referenced in the U.S., our Canadian clients must also comply with regulations set forth by the Canada Revenue Agency, or CRA.

In this article, we’ll give a quick overview of the CRA gift guidelines, explain why they benefit nonprofits, and explain how CharityEngine helps keep Canadian clients compliant.

Overview of CRA Gift Guidelines

The Canada Revenue Agency has outlined specific guidelines regarding the tax implications of gifts given to individuals, employees, charities, and even gifts from businesses or involving property. In general, the rules specify what can be deducted, what isn’t taxable, and when capital gains tax will be triggered.

For nonprofits specifically, here are eight key points to consider. For more information on any of them, visit the CRA website.

1. Only registered charities can issue official donation receipts for tax purposes.
2. When deciding on the value of in-kind gift receipts, fair market value must be used.
3. If a donor receives an incentive for a charitable gift, such as tickets to a gala, the value of the incentive must be subtracted from the gift amount for taxes.
4. Receipts, when requested by the donor, must be issued for every gift that exceeds $20.
5. Charities must keep accurate records of the receipts they issue.
6. Different guidelines exist for different types of gifts: these include cash donations as well as in-kind gifts.
7. Rules exist to govern the acceptability of different types of fundraising. Examples of what fundraising isn’t acceptable include:

• • Fundraising for a collateral non-charitable purpose
  • Fundraising that delivers more than an incidental private benefit
  • Fundraising that is contrary to public policy
  • Fundraising that is deceptive or unrelated to the charity

8. Split receipting refers to the portion of a gift eligible for tax receipts. This would be triggered, for example, if a donor “won” premium tickets to an event after making a large donation. The CRA website has more information on this.

None of the guidelines are surprising or too difficult to consider, but compliance is mandatory. Not only are there strict rules against sharing your charity’s registration number or issuing receipts on behalf of another organization, but inadequate records or inflated receipt amounts can also land you in hot water.

The Importance of CRA Gift Guidelines

Every guideline imposed upon nonprofits and their vendors is designed to protect data and donor information and keep all businesses transparent and above the law. Donors are protected in that their donations are being used as they intended, and the nonprofit is protected as compliance helps you avoid legal headaches and maintain a good reputation.

In addition, the guidelines ensure nonprofits benefit from:

• • Accountability, as they will operate transparently and responsibly
  • Tax compliance, as they will follow proper financial practices
  • Public trust, as nonprofits demonstrate their commitment to ethical operations
  • Fraud prevention, as the guidelines prevent misuse of funds or other fraudulent activities.

While Canadian clients have to maintain compliance, these are best practices for most nonprofits and make sense to keep donors and nonprofits in the clear. It’s also vital to note that your nonprofit should maximize fundraising, which not only helps your mission but also provides tax benefits to your supporters.

How CharityEngine Helps with Compliance

We’ve written about how CharityEngine helps international nonprofits, and discussing the CRA guidelines is a logical post-script. Many of our features, such as accepting multiple currencies and creating donation forms in native languages, make adhering to the CRA guidelines even easier.

For more specific features that help with compliance, we can look at receipting in the CharityEngine platform.

Automatic Unique Serial Numbers

A key CRA regulation is that every transaction must have a unique serial number or ID, even if you are resending that receipt. CharityEngine automatically assigns a unique ID for every receipt.

Identify Tax-Deductible Payment Amount

CharityEngine makes split receipting easy! You can enter the payment amount and designate which portion is tax deductible.

Keep Comprehensive Records of In-Kind Gifts

If your nonprofit organization accepts in-kind contributions, the platform prompts you to keep meticulous records regarding the sale price, broker, broker fee, and more.

Manage Statement Records with Ease

In addition, CharityEngine’s statement records can be filtered by almost any attribute. And it’s easy to print or email a statement.

Simplify Workflows with Batch Acknowledgments

With CharityEngine, nonprofits can send batch acknowledgments. You can enter many transactions and send receipts to each person with (practically) the touch of a button.

Does every fundraising platform have features that make it easy for Canadian clients to comply with specific regulations? Some do, but it’s important to do your research and know that your CRM vendor has specific experience with—and specific tools for—CRA compliance.

A Partner to Canadian-Based Nonprofits

While we can educate our audience on CRA compliance and point out how CharityEngine’s fundraising software makes compliance easy, this underscores a basic truth about our company: our product evolves as our clients’ needs grow. We consistently release features and updates; most often, they’re driven by client requests (at least 80% of the time!).

The functionality we highlight in this article makes recordkeeping and general compliance easier for every nonprofit, regardless of where they’re based. And you can rest assured that CharityEngine, as a company and as a platform, will remain nimble and ready to respond to the needs of all our clients.

Interested in learning more? Book a demo and let our team show you why we’re the perfect partner for Canadian-based nonprofits.