Donations of time to a charity

November 14, 2007 by Dan White.

Dear Editor,

Can you explain the procedure of donating time to a charity and getting a donation receipt? I am aware that tax donations count for 50 percent of the value only.  However, in many cases people I know are donating thousands of dollars worth of professional advice. 

Thanks

Sheila

Dear Sheila,

Donating time to a charity and getting a receipt for it from the charity is not the best way to do ensure a tax credit. CRA gets lots of money from people who choose to use this method. While it usually slips by CRA, it does not make it right. Remember CRA’s default role is to be the defacto expense rejector.

The typical method does not assign a value paper trail. In order to make it work; the Donor has to donate the actual money first to create the paper trail. This has to be an independent transaction; He gets a receipt for the full amount. He then sells his consulting services to the charity. He then invoices, gets paid, and claims the income. He then claims the donation based on the charitable donation. This exercise gets him revenue neutral and leaves him with the charitable donation receipt.

The thing to be clear on is: donating to a charity is not financially beneficial to the donor. It only substitutes paying charity for paying tax and there are pitfalls to be aware of. Regards

Editor Dan

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