C. Tremblay (613) 957-2139
AUG 10 1988
This is in reply to your letter of July 5, 1988, requesting our confirmation that the responsibility of valuing an in kind donation is up to the tax exempt organization and that exchanging cheques is not necessary.
We confirm that exchanging cheques is not necessary. As to valuing an in kind donation, Interpretation Bulletin IT297R, dated February 20, 1984, discusses gifts in kind to charity and others, and states that the fair market value of the gift, at the time the gift was made, must be determined. The person who determines the fair market value of the property must be competent and qualified to evaluate the particular property being transferred by way of gift. Only gifts to a registered charity are deductible.
Subsection 3500(1) of the Income Tax Regulations provides criteria for the contents of the official receipts from registered organizations. If the donation is a non-cash donation, the receipt shall show the fair market value of the donated property at the time the gift was made, the date of receipt of the donation, a brief description of the donated property and the name and address of the appraiser of the donated property (if an appraisal was done). Accordingly, the charitable organization issuing the donation receipt is responsible for assuring that the contents of the receipts are accurate. Thus, if a valuation is challenged at a subsequent time, it is the responsibility of the organization acquiring the in kind donation and issuing the receipt to provide evidence of the fair market values applied.
We trust our comments are of assistance.
Yours truly,
for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch