GST/HST on Donations to Charities
The GST/HST does not apply to a donation if the donor does not receive anything in return. However, if the donor receives property or services in exchange for the donation, even if the value of the donation exceeds the value of the offered property or services, the GST/HST generally applies on the full value of the donation. (A number of exceptions to this treatment apply, including where the service or property offered by the charity relates to a special fundraising event, such as a gala dinner, annual cookie sale or charity auction, or where the charity provides the donor goods that were previously gifted to the charity. Such supplies are exempt from GST/HST. In addition, a charity that qualifies as a “small supplier” (e.g., makes under $50,000 of taxable sales annually) is not required to collect GST/HST.)
Special rules are provided under the Income Tax Act to deal with transactions where property or services are supplied in exchange for or in recognition of a donation to a charity. Under the Income Tax Act “split-receipting” rules, where a charity encourages or recognizes a donation by supplying property or services in exchange, the charity generally may issue a donation receipt for the amount paid by the donor less the value of any property or service that the donor receives. Consequently, such donations are treated less favourably under the GST/HST than under the Income Tax Act.
To bring the GST/HST treatment of this type of exchange into line with the treatment under the Income Tax Act split-receipting rules, Budget 2016 proposes a relieving change to provide that when a charity supplies property or services in exchange for a donation and when an income tax receipt may be issued for a portion of the donation, only the value of the property or services supplied will be subject to GST/HST. The proposal will apply to supplies that are not already exempt from GST/HST. It will ensure that the portion of the donation that exceeds the value of the property or services supplied is not subject to the GST/HST.
This measure will apply to supplies made after Budget Day.
In addition, where a charity did not collect GST/HST on the full value of donations made in exchange for an inducement, for supplies made between December 21, 2002 (when the income tax split-receipting rules came into effect) and Budget Day, the following transitional relief will be provided:
- If GST/HST was charged on only the value of the inducement, consistent with the income tax split-receipting rules, or if the value of the inducement was less than $500, the donors’ and charities’ GST/HST obligations will effectively be satisfied, resulting in no further GST/HST owing.
- In other cases, the charity will be required to remit GST/HST on the value of the inducement only (i.e., the relieving split-receipting rules will apply).
Source: Government Budget Document
The Minister of Finance tabled the Government’s 2016 Federal Budget on March 22, 2016. There are few tax measures in Budget 2016 that impact registered charities, which are highlighted below, and none for non-profit organizations (NPOs).
- Investments by Registered Charities in Limited Partnerships: Budget 2016 confirms the Government’s intention to proceed with the measure announced in Budget 2015 which allows registered charities to acquire or hold passive investments in limited partnerships.
- Donations Involving Private Company Shares or Real Estate: Budget 2016 announces the Government’s intention not to proceed with the measure announced in Budget 2015 that would provide an exemption from capital gains tax for certain dispositions of private company shares or real estate where cash proceeds from the disposition are donated to a registered charity within 30 days. The removal of this capital gains exemption will come as a disappointment for some in the charitable sector.
- GST/HST on Donations to Charities: In addition to the exemptions available for many goods and services provided by charities, Budget 2016 proposes a relieving change to provide that when a charity supplies property or services in exchange for a donation and when an income tax receipt may be issued for a portion of the donation, only the value of the property or services supplied will be subject to GST/HST. The proposal will ensure that the portion of the donation that exceeds the value of the property or services supplied is not subject to GST/HST. It also brings the GST/HST treatment of this type of exchange into line with the split-receipting rules under the Income Tax Act.
- Political Activities: Budget 2016 also confirms the Government’s commitment to review and clarify the rules governing political activities of charities. The Canada Revenue Agency, in consultation with the Department of Finance, will engage with charities through discussions with stakeholder groups and an online consultation.
Source: BLG Commentary
Posted in Charity
Tagged with: cra
How to Praise Your Team to Make the Most Impact – if it’s from the heart, you can’t say thank you too often
If you’re stingy with praise – or too effusive – it can derail your team’s productivity and engagement. There is an art to offering words of praise, and every leader needs to learn it. There has been a lot written … Read »
2015 Review of @QuickBooks Online by CPA Practice Advisor #Accounting
QuickBooks Online is a good fit for those looking for a solid financial product that is one step above basic micro-business accounting solutions, yet not filled with a lot of unnecessary features. QuickBooks Online is also easily scaled up to the more…Read More
Building Client Loyalty in the “Age of Disruption” Even #accounting gets disrupted!
For years now, we’ve been talking about how our profession is poised on the brink of massive changes, driven primarily by the explosive growth of digital technology. We have successfully … [Read More…]
Cloud #Accounting: Save The Environment One File At A Time #Paperless #Office
Every journey begins with one step. While trying to eliminate your carbon footprint is a lofty if not impossible goal there are small things every individual can do to improve the world we live in and leave a sustainable planet for our children.Environmental benefits of cloud computing While cloud computing may not seem all that eco-friendly at first glance, a closer look reveals a number of benefits. A six-month study conducted by Lawrence Berkeley National Laboratory and Northwestern University with funding from Google has found that moving common software applications used by 86 million U.S. workers to the cloud could save enough electricity annually to power Los Angeles for a year.Virtual Meetings Can Save Time, Money and the…Read More
Dan Wernikoff: Small Businesses are Unique | THE METHOD BLOG @MethodCRM @QuickbooksCA
Dan Wernikoff, Intuit’s GM of the Small Business Group, speaks to the changing face of the QuickBooks customer base. Every small business is unique and with integrated and extensible software like QuickBooks and Method, they can have a solution that’s just right for them.
QB gives M+M’s a run for their money! Oh, they talk to #accountants too.
At QuickBooks, we spend a significant amount of time listening to accountants to find out what drives them, what frustrates them, and what could make their lives so much easier. Most accountants are constantly seeking insight and the latest advice that could affect their profession and allow them to prepare their practice for future success, […] The post How to ‘Get Connected’ with QuickBooks appeared first on UK Small Business Centre | QuickBooks .
What’s up in apps that work with @QuickBooksCA Online: July 2015 #accounting
This QuickBooks apps update includes Avalara, Insightly, Replicon, StockAid, Chrometa, and more! The article What’s up in apps: July 2015 appeared originally on QuickBooks Blog .
Lean in: Women, Work, and the Will to Lead (and the will to own up to your mistakes)
I have been devouring Sheryl Sandberg’s book: “Lean in: Women, Work, and the Will to Lead” I have found it exhilarating and thoughtful. She talks about gender equities and inequities in the workplace and home. Her passion for this topic clearly comes through and her observations keen. She tells on herself with examples from her life. She is honest about her mistakes and successes. A risk most of us would not take. She is passionate about bringing about more women into high leadership positions. Women making powerful choices that encourage them to live life passionately and to its fullest. She describes the struggles between juggling work, kids and home while maintaining a career that she loves and is demanding. She celebrates the…Read More