Besides the obvious personal rewards of potentially saving or enhancing someone's life by donating, there are tax relief issues to be enjoyed by Canadian citizens through giving.

The Income Tax Act encourages taxpayers to support activities of registered charities. The Act encourages support by allowing your gifts to such organizations to qualify the donor for a tax credit.

The Canadian government has raised the allowable amount of charitable donations from 20% to 75% of your annual income since 1996.

Below, we have provided a brief summary of literature on "gifts-in-kind".

The Canadian government and the CCRA encourage giving:

“Charities play a vital role, both in Canadian society and around the world. Generous tax incentives have been created to encourage gifts by individuals and corporations to registered charities”
CCRA document RC4142 (E) Rev.02

Besides the obvious personal rewards of potentially saving or enhancing someone’s life by donating food, there are tax relief issues to be enjoyed by Canadian citizens through giving.

“A gift is a voluntary transfer of property for which the donor receives no benefit in return. For there to be a gift, the following conditions must be met:

	The donor transfers ownership of property (cash, or gifts in kind such as goods or land) to a registered charity:
	The transfer is voluntary; and
	No benefit is provided to the donor, or a person selected by the donor, unless the benefit is of nominal value.” CCRA document RC4142 (E) Rev.02

In assessing whether a donor has obtained a benefit from the making of a donation, the jurisprudence establishes that the receipt of a tax benefit as a consequence of the donation does not, in and of itself, affect the status of the donation as a gift. In the Queen v. Friedberg, 92 DTC 6031, the Federal Court of Appeal stated:

"Thus, a gift is a voluntary transfer of property owned by a donor, in return for which no benefit or consideration flows to the donor (see Heald, J. in the Queen v. Zandstra...) The tax advantage received from making charitable gifts is not normally considered a "benefit" within this definition, for to do so would render the charitable donation deduction unavailable to many donors."

The Federal Court of Appeal has held that an individual can purchase and immediately gift an item even if their motive is to gain a tax advantage. The court stated:

“It is clear that it is possible to make a “profitable gift”. Where the actual cost of acquiring the gift is low, and the Fair Market Value is high, it is possible that the tax benefits of the gift will be greater than the cost of acquisition. A substantial incentive for giving property is thus created through these benefits.”
(The Queen vs. Friedberg)

“The term gift in kind usually refers to property other than cash- in particular capital property, depreciable property, and personal-use property. It also includes a residual interest, a right of any kind, a license, a share, and inventory of a business. However, it does not include a gift of services.

A charity that receives a gift in kind can issue a tax receipt for the fair market value of the gift on the date it was donated.”
CCRA document RC4142 (E) Rev.02

“Fair market value generally means the highest price that a property would bring, expressed in dollars, in an open and unrestricted market, between a willing buyer and a willing seller who are both knowledgeable and informed, and prudent, and who are acting independent of each other.”
CCRA document RC4142 (E) Rev.02

For additional information on giving please refer to the following CCRA publications by clicking on the Publications link:

	Tax Advantages of Donating to Charity RC4142 (E) Rev.02
	Gift and Income Tax P113(E) Rev. 02
	Bulletin IT-110R3