From time to time a charitable tax receipt needs to be replaced. The procedure for issuing replacement receipts depends on whether the first receipt was lost, spoiled or needs to be cancelled due to a return of the gift.
Where a donor has lost the first receipt issued, the charity can issue a replacement receipt. The replacement receipt must contain all the required information for a receipt plus the serial number of the lost receipt. The replacement receipt should state that it “cancels and replaces the lost receipt.”
A charity must keep duplicate copies of the receipts issued. The charity’s copy of the donor’s lost receipt should be kept and marked “cancelled.” The charity should keep copies of the new and old receipts in the charity’s books and records. The CRA does not require a report of this transaction.
Where there is a mistake on the first receipt issued and therefore the first receipt is spoiled, a charity can issue a new receipt. The charity should collect the original receipt back from the donor and keep both copies (the donor’s and charity’s) in its records. The original receipts should be marked “cancelled”.
The replacement receipt should state that it “cancels and replaces the lost receipt.” CRA does not require a report of this transaction. However, the charity should keep the copies of the spoiled and new receipt in the charity’s books and records.
Under common law, it is rare that a charity can legally return a gift. See our March 2011 newsletter for more on this topic.
However, if the charity does return a gift and the gift is worth at least $50.00, then the charity has an obligation to report the return of gift to CRA not later than 90 days after the property is returned. Currently, there is no CRA form for this report. However, the Regulations to the Income Tax Act state the information return shall include the following information:
- a detailed description of the property;
- the fair market value of the transferred property at the time of the transfer;
- the date of which the property was transferred;
- the name and address of the transferee of the property including, in the case of an individual, their first name and initial; and
- if the transferor of the property, or a person not dealing at arm’s length with the transferor, issued the original receipt, then include the information contained in the original receipt.
The lawyers in the charities group at Miller Thomson LLP can assist charities with issues around receipts and reporting to CRA.