Calgary Flames fans were riling up Edmontonians this January by fundraising for a billboard ad in the Edmonton Oilers’ turf featuring a Flames player. An Edmonton woman came up with a charmingly Canadian response to the show of friendly rivalry between the two Albertan hockey teams’ fans. She made a donation to a Calgary-based charity in honour of Oilers’ player Zack Kassian and tweeted a screenshot challenging other Oilers fans to do the same.
Charities commonly accept donations from individuals honouring someone else. But who gets the tax credit?
In this case, it’s the Oilers fans (sorry Zack). With a few exceptions, Canada Revenue Agency’s (CRA) policy is to require that, the tax receipt be in the name of the “true donor” of the gift. For example, when you donate at the grocery store check-out, the grocery store does not get to claim a charitable donation tax deduction for your donation. As another example, if you ask your friends and coworkers to make a donation to a charity on your behalf for your birthday, you do not get the tax receipt. Your friends and coworkers are the true donors because the money or property belonged to them and they entrusted it to you for the purposes of a donation. If you receive a gift for your birthday and you decide to donate it, then you are the true donor and your name should be on the tax receipt.
Charities are advised to make reasonable efforts to ensure that the name on the receipt matches the name of the true donor, and to keep records of their efforts. Charities are not obligated to issue tax receipts to donors, and should refuse to issue a receipt if they cannot reasonably determine who the true donor is. What is reasonable depends on the circumstances.
CRA policy is more flexible when it comes cheques issued from joint chequing accounts, as well as situations in which donors put their spouse’s name. The latter situation has some interesting and likely unintended tax planning consequences. Another area in which CRA has proven to be flexible is anonymous donations, allowing donors who wish to be anonymous to make a donation through an agent or trustee under certain conditions. However, in those circumstances the agent or trustee’s name goes on the receipt, but ultimately the receipt is given to the true donor.