Charity Donations and Receipts: How to Stay Compliant with CRA Rules — CPA Firm Near You, Montreal

Introduction

Issuing donation receipts is one of the most powerful fundraising tools for charities in Quebec — but also one of the riskiest areas for non-compliance. CRA imposes strict rules on who can issue receipts, when receipts can be issued, what information must be included, and how donations must be documented. Incorrect receipts can lead to penalties, audits, or even revocation of charitable status. This guide explains the rules for issuing official donation receipts and how a CPA firm near you in Montreal can help ensure full compliance.

Legal and Regulatory Framework

Under the Income Tax Act, only registered charities may issue official donation receipts for income tax purposes.

A valid donation receipt must include:
• Name and address of the charity
• Registration number
• Serial receipt number
• Date donation was received
• Date receipt was issued
• Donor’s full name and address
• Amount of the donation
• Whether it was cash or non-cash
• Fair market value (FMV) for non-cash gifts
• Description of the property donated
• CRA-compliant disclaimer language
• Signature of an authorized official

Receipts may only be issued for true gifts, not:
• Payments for services
• Event tickets
• Raffle purchases
• Sponsorship value received
• Fundraising purchases (e.g., merchandise, meals)

GST/HST/QST does not apply to donations unless there is a benefit exchanged.

Key Court Decisions

Courts have ruled that:
• Charities must keep supporting documents for every receipt issued
• Valuations must be reliable for non-cash gifts
• Receipts issued for political contributions or services are invalid
• Ineligible gifts must be reversed and reported to CRA
• Repeated receipting errors can lead to charity deregistration

Judges emphasize the importance of good governance, transparent controls, and precise documentation.

Why CRA and Revenu Québec Target Donation Receipts

Donation receipts are a top audit trigger because:
• Some charities issue receipts for ineligible gifts
• Non-cash gifts are often overvalued
• Receipts do not match bank deposits
• Unauthorized staff issue receipts
• Serial numbers are missing or inconsistent
• Donor information is incomplete
• Receipts are issued for fundraising events or sponsorships

Auditors compare receipts, bank statements, donor letters, board minutes, and valuation reports.

Mackisen Strategy

At Mackisen CPA Montreal, we help charities maintain perfect receipting compliance. We:
• Review and rewrite receipting policies
• Train staff and board members on receipting rules
• Implement donation tracking and serial-number systems
• Validate valuations for non-cash gifts
• Reconcile donations to bank statements
• Correct past receipting errors and notify CRA where required
• Prepare year-end charity filings, including T3010 returns

Real Client Experience

A Montreal charity issued receipts for event tickets and raffle purchases — all non-eligible. CRA demanded corrections and threatened sanctions. We rebuilt the receipting system, retrained staff, and corrected filings. Another charity accepted non-cash donations of artwork at inflated values; we obtained professional appraisals and resolved the audit.

Common Questions

Can charities issue receipts for volunteer hours?

No. Services are not considered gifts.

Can charities receipt sponsorships?

Yes, but only for the portion where no commercial benefit is received.

Are non-cash gifts allowed?

Yes, with proper valuation and documentation.

What happens if a receipt error is found?

Charities must issue corrected receipts and may need to notify CRA.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps charities manage donation receipting with precision. Whether your charity processes 50 donations or 50,000, our expert team ensures full compliance and audit-ready records.