Receipting year-end donations can be a bit trickier than at other times during the year. CCCC is often asked, “when does a donation qualify for a current year receipt?”
The starting point for any receipting question is to look at the Income Tax Regulations.
Regulation 3501 lists the required content for official receipts, and there is a lot. But for our year-end receipting question, the relevant parts are:
- Where the gift is a cash gift, the receipt must show the date on which, or the year during which, the gift was received
- Where the gift is a gift of property, the receipt must show the date on which the gift was received (among other things)
Receipting In-Person Offerings/Donations
When in-person church offerings are collected on January 1 of the new year, it will be a gift for the new year, regardless of what is written on the envelope or the cheque. Similarly, any credit card or debit transactions that are initiated on January 1 will be a gift for the new year.
Receipting Donations Sent By Mail With Postmark
When donations are received by mail, the Canada Revenue Agency considers the date of the donation to be the date of the postmark on the envelope. Your charity needs to keep the stamped envelope as part of its books and records.
This means that if a cheque dated December 31 is received January 5, it can still be receipted for the December 31 date, so long as the envelope is postmarked prior to the new year.
Charities need to be mindful of the date written on the donation itself to ensure a cheque is not post-dated into the new year.
Receipting Donations Sent by Mail Without Postmark
When donations are received by mail without a postmark, your charity needs to be consistent and show good faith in how the donation is processed and recorded.
If the envelope arrives along with other envelopes all postmarked December 31, and the donation cheque is dated for the prior year, it may be reasonable to include it in the prior year.
If the envelope arrives along with other envelopes that have mixed postmarked dates, it may be reasonable to include it in the new year.
Receipting Electronic Donations “In Process”
When donations are received electronically, the CRA does not have a specific statement about determining the date. However the same principles as the ‘postmarked cheque in the mail’ can be applied.
For example, if your charity’s bank, service provider, or credit card company provides hard copy documentation that the donor made the transaction on December 31 or earlier, it would be reasonable to treat the gift as received prior to the new year. Your charity needs to keep the documentation as part of its books and records.
Receipting Donations Consistently
It is up to your charity to set its own policy on how it will treat end-of-year donations. Your charity may choose to (1) determine, using postmarks and transaction documentation, whether the donation should be receipted for the current year or (2) treat any gift delivered on or after January 1 as a gift for the new year.
Your charity should be consistent in this choice and should advise donors ahead of time. Your approach should be set out in a gift acceptance policy so that staff, stewardship representatives, fundraisers, and donors are all aware and informed.
Your charity may also choose to incorporate a ‘cut-off’ date that is determined each year, depending on the calendar, holidays, and staffing – e.g. the Friday ahead of New Year’s Day when that day falls on weekend.
A simple addition to your gift acceptance policy can address year-end gifts. For example:
Year-End Gift Acceptance Policy
Donations sent by mail must be:
- Dated in the current year,
- Have an envelope stamped (or metered) and postmarked by December 31 of the current year, and
- Be delivered within one week of New Year’s Day
For an official donation receipt to be issued for the current year.
Donations sent electronically, whether by e-transfer, credit card, or third-party service provider must be received by [charity] on or before December 31 for an official donation receipt to be issued for the current year.
The content provided in this blog is for general information purposes and does not constitute legal or professional advice. Every organization’s circumstances are unique. Before acting on the basis of information contained in this blog, readers should consult with a qualified lawyer for advice specific to their situation.