Recent Decision Highlights Importance of Proper Receipting

25 juillet 2011 | Andrew Valentine

( Disponible en anglais seulement )

The recent decision of the Tax Court of Canada in Oloya v. R. highlights the pitfalls that can occur when insufficient attention is paid to the form and content of donation receipts issued to donors. The case involved an appeal by a taxpayer, a Mr. Oloya, from reassessments in respect of donation receipts that he and his wife had claimed for various gifts to a charity of which he was the founder.  The charity was involved in development work in Africa, and the judge acknowledged that the taxpayer operated the charity with the best of intentions.  However, the judge also stated that Mr. Oloya lacked the necessary accounting skills and knowledge of receipting rules, and that this had resulted in numerous tax credits being improperly claimed.  The case is an important reminder that it is essential that charities know and follow the rules surrounding receipting for gifts.

The taxpayer had claimed several receipts issued for the value of services donated to the charity.  The Court confirmed that receipts can only be issued for donations of property and that gifts of mere services cannot be receipted.  While it is possible to be paid for services performed, and to receive a receipt for a voluntary donation of this payment back to the charity, a receipt cannot simply be issued for the value of services provided.

Mr. Oloya also sought to claim credits for several items that he had purchased on behalf of the charity, but for which no receipts had been issued.  The judge stated tax credits cannot be claimed except where the taxpayer has received a receipt containing all legally required information.  He also noted that because Mr. Oloya expected to be reimbursed by the charity, these purchases were not in fact gifts but rather loans.

Both Mr. Oloya and his wife sought to claim various gifts in kind to the charity. Mr. Oloya’s wife had made gifts of various office equipment, and although the Canada Revenue Agency (« CRA ») did not question the amounts claimed, it noted that the receipts did not contain a description of the property donated as required by the Income Tax Regulations.  The Court held that because the receipt did not contain all required information, no credit could be claimed.

The Oloyas also sought to claim credits in respect of a room in their house that was used for the charity’s business.  The judge noted again that receipts can only be issued for gifts of property.  If the charity had paid the Oloyas rent, which they then donated back to the charity, this would be eligible for a receipt. However, the judge appeared to view the mere use of a room as not constituting a gift of property.  The decision was made easier for the judge because the receipt issued did not describe the property gifted and therefore could not be receipted in any event.

The final issue involved a purported gift of land in Uganda to the charity.  The land had been owned by Mr. Oloya’s father and was then allegedly gifted to Mr. Oloya.  However, no documentation could be produced to establish that the transfer from the father to Mr. Oloya had been validly completed under local law (in this case, the law of Uganda).  The judge concluded that it was most likely not possible under Ugandan law to transfer title in land without a written document, and that therefore the transfer from the father to Mr. Oloya had never occurred.  Accordingly, Mr. Oloya could not have gifted this land to the charity. The Court disallowed the receipt claimed.

This case is particularly unfortunate because in each instance (with the possible exception of the gifted land) a receipt could have been validly issued for the value of each gift, and the disallowing of these gifts was entirely avoidable.  However, because the charity was unfamiliar with the rules, these gifts were disallowed. Charities should confirm that their current receipting practices and Gift Acceptance Policies are up to date and properly reflect the rules.  Failure to do so can result in penalties and negative consequences for both the charity and the donor.

Avis de non-responsabilité

Cette publication est fournie à titre informatif uniquement. Elle peut contenir des éléments provenant d'autres sources et nous ne garantissons pas son exactitude. Cette publication n'est ni un avis ni un conseil juridique.

Miller Thomson S.E.N.C.R.L., s.r.l. utilise vos coordonnées dans le but de vous envoyer des communications électroniques portant sur des questions juridiques, des séminaires ou des événements susceptibles de vous intéresser. Si vous avez des questions concernant nos pratiques d'information ou nos obligations en vertu de la Loi canadienne anti-pourriel, veuillez faire parvenir un courriel à

© 2020 Miller Thomson S.E.N.C.R.L., s.r.l. Cette publication peut être reproduite et distribuée intégralement sous réserve qu'aucune modification n'y soit apportée, que ce soit dans sa forme ou son contenu. Toute autre forme de reproduction ou de distribution nécessite le consentement écrit préalable de Miller Thomson S.E.N.C.R.L., s.r.l. qui peut être obtenu en faisant parvenir un courriel à