Gifts-in-Kind: How to Maximize Your Tax Deduction

Can Canadian charities issue tax receipts for donations that are not monetary? The answer depends on the status of the charity and the nature of the donation.

The prerequisite for any charity to issue tax receipts of any kind is that it must be recognized by the Canada Revenue Agency as a registered charity. Without that status, the charity’s receipts (and therefore your donation) can have no tax implications. As long as the charity is registered, though, it is able to give tax receipts for qualifying non-cash donations.

The rule of thumb for a non-cash donation (also known as a “gift-in-kind”) to qualify for a tax receipt is that it must be actual property. This can include donations of real estate or physical belongings, provided the donation is permanent. (It is not considered a donation if it is simply on loan.) In such a case, the charity must be able to determine the fair market value of the donation and issue the receipt for that amount. The receipt should also indicate that it is for a gift-in-kind and include a brief description of the gift.

In contrast, charities cannot issue receipts for services rendered. This is considered volunteering, not donating. For example, if a painter offers to paint the offices of a charity, the charity could not issue a tax receipt for the time and effort required to perform the task. It could, however, issue a tax receipt for the cost of the paint.

This does not mean there are no options for those who wish to volunteer their services. In the above example, the painter could issue an invoice to the charity, the charity could pay that amount, and then the painter could donate the funds back to the charity. In this way, the painter could receive a tax receipt for the donation. On the downside, the invoiced amount would also have to be claimed by the painter as income.

Once a tax receipt is issued by a charity, the donor is able to claim that amount as a charitable donation on that year’s tax return. The charity must also report the non-cash donation in Schedule 5 of form T3010, the annual Registered Charity Information Return.

Making gifts-in-kind is a valid and worthwhile option for donors looking for non-monetary alternatives to support their favorite charities. Just be sure to verify upfront that your donation qualifies for a tax receipt and that the charity is capable of issuing that receipt. By doing so, you can avoid disappointment later on.

Sloan Group is a Toronto accounting firm and business consultancy that helps businesses and individuals handle taxes, finances and much more! For more info on how we can help, contact us at (416) 665-7735 or send us an email

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