When average Canadian taxpayers pay attention to the receipts issued to them by Canadian charities to which they have donated, it is probably for two reasons: to ensure they actually have them all in hand at tax filing time, and to identify the dollar amounts therein so that they can put them down on their income tax return. Beyond the “bottom line,” it is not likely that donors typically scrutinize the form and other content of the receipt—even though official receipts for donations are neither lengthy nor complicated.
Yet, a recent decision of the Tax Court of Canada displayed how proper receipts are the gateway and necessary minimum for the credibility of a donor’s claim to have made a charitable gift that brings tax benefit. The Courts take seriously a failure to comply with the requirements of the law around official receipting for charitable donations.
In Madamidola v. the Queen 2017 TCC 245, Justice Campbell Miller inquired after two elements of claims to tax credits that Mr. Madamidola made for 2004 and 2005: “[f]irst, did Mr. Madamidola actually make the donations in those amounts claimed, and second, did he obtain proper charitable receipts for such amounts?” The Court tackled the second question first.
Then, as now, section 3501 (1) of the Regulations of the Income Tax Act outlined the required contents of receipts. In Madamidola, various receipts were not deemed to be proper because some combination of the following were missing:
- the charity’s address “as recorded by the Minister,” which Justice Miller pointed out would be fatal on its own;
- the place/and or locality from which the receipt was issued;
- the address of the donor, Mr. Madamidola; and
- two statements fulfilling extra requirements for a gift in kind (not necessary for a cash gift), of:
- the date on which an alleged donation was made, and
- the name(s) of the appraiser of the property.
The Court thus concluded that the receipts did “not meet the stringent requirements” of the law, providing a sufficient basis for dismissing the appeal. Justice Miller had reiterated the indications from Plante v R.[1] about how receipting requirements “are not frivolous or unimportant,” but rather “necessary for checking both that the indicated value is accurate and that the gift was actually made…to prevent abuses of any kind.” Indeed, while each of the omissions identified by the court in this case could very well have been just due to ignorance or sloppy record-keeping, it is not hard to imagine, either, how each could point to an abuse.
Providing the required content with respect to gifts of property other than cash is perhaps the most demanding duty of producing proper receipts; currently the requirements are: the date on which the gift was received, a brief description of the property, and the name and address of the appraiser of the property if an appraisal is done, and the amount that is the fair market value of the property at the time that the gift is made. Any “challenge” this duty presents correlates with the potential murkiness of valuation of such property, and the corresponding potential for abuse.
Proper receipts are the shortcut to a minimum level of credibility about the donor having actually made a gift. Because of the receipt deficiencies in this case, there was no need, Justice Miller explained, “to make a finding on the first question of whether or not Mr. Madamidola actually made these donations”–the question of credibility. Nevertheless, Justice Miller went on to close his decision explaining why he remained unconvinced that the Appellant’s receipts were “an accurate reflection of what he actually donated,” citing a lack of corroborating evidence from the charity, or of other documentary proof, or even proof of requests by the Appellant for such evidence or documents.
The reference, in particular, by Justice Miller to the “lack of any requests” by the Appellant for an amended receipt from the charity points to the responsibility of the charitable giver to ensure receipts issued are complete. The careful Canadian charitable donor would therefore do well to learn about and look for the hallmarks of a legitimate receipt.
Similarly, the responsible Canadian charity must ensure that the receipts it issues to donors contain all the elements required by the Income Tax Act and its Regulations. With the “Issuing complete and accurate donation receipts” checklist the Canada Revenue Agency has handily provided on its website[2], it is literally a matter of a charity or a donor checking off the boxes as it reviews the receipt contents.
[1] [1999] 2 CTC. 2631, [1999] ACI No. 51
[2] https://www.canada.ca/en/revenue-agency/services/charities-giving/charities/checklists-charities/issuing-complete-accurate-donation-receipts.html