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Township of Brock Corporate Policy
Policy Name:
Donation Policy
Policy Type:
Finance
Policy Number:
F19
Reference:
N/A
Date Approved:
September 11, 2023
Date Revised:
September 11, 2023
Approval By:
Senior Management Team
Point of Contact: Director of Finance/Treasurer
POLICY STATEMENT:
This policy applies to donations made to the Township of Brock ("Township") and sets
out the eligibility for the issuance of income tax receipts.
PURPOSE:
The purpose of the Donation Policy is to set out guiding principles for the donation
eligibility, the eligibility for donation receipts (for income tax purposes), and the amount
to be recognized.
SCOPE:
This Policy applies to all departments, boards and agencies falling within the financial
reporting requirements of the Township, with the exclusion of the Brock Township
Public Library, who has their own policy. This policy also supports the Township's
commitment to meet the requirements for issuing donation receipts according to the
Canada Revenue Agency ("CRA").
BACKGROUND
The Township is considered to be a "qualified donee" under the Income Tax Act of
Canada ("ITA"). The requirements to be considered a qualified donee are as follows:
-
Municipalities are required to be registered with CRA and included on a
publicly available list maintained by CRA;
-
Municipalities are required to abide by the rules of the ITA in relation to the
issuance of official donation receipts;
- Municipalities are required to issue receipts that contain the same
information as registered charities, the details of which will be outlined
further in this document; and
- Municipalities are required to maintain proper books and records
supporting official donation receipts issued and provide access to those
books and records to CRA upon request.
If the requirements above are not adhered to, CRA can revoke the status of the
Township as a qualified donee and suspend receipting privileges.
GENERAL RULES:
- No individual(s) or organizations shall solicit funds in the name of or on
behalf of the Township without approval of the CAO or Council unless they
are doing do in relation to an event organized and managed by the
Township of Brock.
- A donation is "a voluntary transfer of property owned by a donor to a
donee, in return for which no benefit accrues to the donor".
- To have a valid donation/gift, there must be an intention to give, a delivery
and an acceptance. Because there must be an acceptance by the donee,
a donation is not completed until it is accepted.
- The donation/transfer is made without the expectation of a return. If a
donor receives an advantage as part of their donation, all or part of the
donation may no longer qualify as a gift.
- The donor cannot direct the gift to a specific person, family or other non-
qualified donee. Donors can direct their gift to a specific program
operated by the Township, however, cannot choose specific beneficiaries
of their donation.
The Township reserves the right to reject any gift or donation in whole or in part.
QUALIFYING DONATIONS:
Donations that qualify for an official tax receipt generally include:
1. Cash
2. Capital, real or depreciable property;
3. Personal use property, works of art, jewellery, rare books, stamps or coins;
4. A leasehold interest or a residual interest in real property;
5. Donations of life insurance properties; and
6. Donations made under a will.
Only the eligible amount of a donation may be recorded on a donation receipt. If the
donor receives any property, services or other advantage in consideration of their
donation, the Fair Market Value ("FMV") of the advantage is deducted from the FMV of
the gift to determine the Eligible Amount for the purposes of the donation receipt.
NON-QUALIFYING DONATIONS:
1. Donations that are given to the Township intended as a flow through to a
specified receipts who does not have charitable organization status;
2. A court ordered transfer of property to the Township, or requirement of the
Township's approval process, such as a site plan or subdivision agreement;
3. The payment of a basic fee for admission to an event, program or membership
does not qualify as a donation that is eligible for the issuance of a tax receipt. An
exception to this rule is for the purchase of a ticket to a fund-raising dinner (gala,
concert, golf tournament or like event). In this instance, the donation is valued as
the difference between the FMV of the food, entertainment, prizes and the
purchase price of the ticket. As per CRA guidelines, the Township will not issue
a tax receipt if the total value of the food, entertainment and prizes exceed 80%
of the purchase price of the ticket.
4. When a donor requests that the donee pay for a portion of the donation no tax
receipt will be issued;
5. Gifts of service (for example, donated time, labour, knowledge);
6. Donations of business marketing products such as supplies and merchandise;
7. A payment for a lottery ticket or other chance to win a prize;
8. The purchase of goods or services from a charity;
9. A donation for which the fair market value of the advantage or consideration
provided to the donor exceeds 80% of the value of the donation;
10. Donations proved in exchange for advertising/sponsorship;
11. Gift certificates donated by the issuer of the certificate are not considered
property, however, a gift certificate that is purchased and then donated does
constitute property, and may be receipted;
12. Pledges;
13. Loans of property;
14. Lease of premises;
15. Donations that have a direct benefit to the donor or any relative of the donor will
not receive a tax receipt; and
16. Gifts-in-kind for which the FMV cannot be determined.
ASSOCIATED COSTS:
At the Township's discretion and determination, the donor is responsible for related
costs for all donations, as applicable, and for which costs are not eligible for a donation
receipt, including:
1. Transportation of the donated item, including transfer costs;
2. Cost for an appraisal/valuation of gifts-in-kind by an independent, qualified
appraiser for donations valued above $1000. Donations of personal property,
public art and real property expected to be valued at $1,000 or less may be
appraised by knowledgeable staff, in conjunction with the use of resources
suitable to establish a FMV (i.e. online sales data).
3. Document for insurance purposes.
4. Conservation treatment, if applicable (i.e. restoration of artwork, cleaning,
repairs, etc.).
VALUING THE DONATION:
All donations receipted will exclude HST.
If an official donation receipt is being issued, it must reflect FMV of the gift received.
The onus is on the Township to determine that the FMV reflected on the donation
receipt is accurate. In cases where the FMV of the gift cannot be determined at the
time the gift is received, a donation receipt cannot be issued.
FMV is the highest price, expressed in dollars that the property would bring in an open
and unrestricted market, between a willing buyer and a willing seller who are both
knowledgeable, informed and prudent and who are acting independently of each other.
GENERAL CONSIDERATIONS FOR GIFTS-IN-KIND:
Gifts-in-kind is a type of charitable giving in which contributions take the form of tangible
goods rather than money.
All gifts-in-kind will be subject to a formal offer and review process. Staff, consisting of
the Director of Finance/Treasurer, the Department Head responsible for receiving the
donations and the CAO will review the donation. The Department receiving the
donation will prepare a report to Council with details of the proposed donation and
providing justification for either acceptance or denial.
This review and report to Council will which considers factors such as:
- Consistency with the Township's priorities, mandates, strategies and
business plans, vision and/or beneficial to the Community of the
Township;
- Compliance with by-laws and policies;
- Conflict of interest or potential for an appearance of a conflict of interest;
- Reputational risk associated with accepting a donation from a particular
donor;
- Political sensitivity;
- Usefulness of the donation;
- Condition and value of the donation;
- Future costs/benefit/risk evaluation in relation to available financial
resources required for installation, storage, maintenance and other
relevant costs, such as insurance;
- Availability for full and unencumbered transfer of ownership/title, and
donor release to allow for such a transfer of title.
- Funding arrangements from the donor, if any, to support ongoing
maintenance.
- Financial implications to the Township both now and into the future,
related to the donation.
Once a gift-in-kind is accepted by the Township, ownership of the asset transfers to the
Township. At that point in time, the Township will accept responsibility for the care and
maintenance of the gift and will be responsible for making any and all decisions related
to the gift. This may include such things as the length of time an item will be maintained
by the Township, where a gift will be placed and how it is used, how an item will be
cared for and when or if an item will be disposed of or replaced.
For specific gifts like public art, signs and benches, the Township may require that a
staff committee be established to consider these donations and whether the Township
is prepared and able to accept these donations. The staff committee will review the
donation proposal to ensure that the Township is willing and able to take on
responsibility for the assets in question and will need to determine if the assets are in
keeping with the Township's asset management plan, maintenance plans and in
consideration the Township's climate change mandate.
There may be instances where these gifts-in-kind are outside the expertise of the
Township to care for, do not align with the Township's strategic mandate or policies, are
in poor condition or may require significant financial consideration to restore or maintain
the gift in good condition. In instances such as these, the Township may be unable to
accept the donation.
If the Township is able to accept the gift-in-kind, an agreement is to be signed between
the donor and the Township, which acknowledges the rights and responsibilities of both
parties.
In order to ensure independence and avoid any real or perceived conflicts of interest,
the Township will not accept donations from persons (corporations) who:
- Have a concurrent application of a permit or licence from the Township or
an application for planning approval from the Township;
- Are bidding on an open and active contract with the Township through a
competitive procurement process;
- Are currently in litigation against the Township;
- Are not in good financial standing with the Township (i.e. who may be in
tax arrears)
Donations of real estate will require consultation with the Township's legal
representative.
GIFT-IN-KIND DONATIONS AT FMV:
The Township will only issue official tax receipts for Gift-in-kind donations where the
donation provides a clear benefit to the Township. The valuation of any donation is
governed by the following:
1. The value placed on the gift-in-kind will be determined by the items FMV.
2. Valuation of FMV is based on an arm's length sale and purchase of similar
property at or near the same date.
3. If the item is valued at $1,000 or less, a Township employee qualified to make
the appraisal for such items may complete an appraisal of the item.
4. If the item is valued at greater than $1,000, outside appraisals are required
unless there is a ready and verifiable market for the item from which the FMV
can be ascertained. Art appraisers are to be members of the Art Dealers
Association of Canada ("ADAC"). In addition, the dealer, appraiser or other
knowledgeable individual must be independent of the donor. At the discretion
of the Treasurer, a second appraiser may be required (at the donor's
expense).The average of these appraisals shall be used to determine the
FMV of the item.
5. The receipt shall be in the amount of the appraised value. The receipt shall
also indicate a description of the object and the name and address of the
appraiser and the appraiser's certification number, if applicable. The receipt
will be dated on the day which the Township received the donation. If two
appraisals are used and they significantly differ in appraised values, a third
appraisal may be requested to clarify the true value.
Donations of land as an ecological gift is administered by Environment Canada through
the Ecological Gifts Program. To qualify for income tax benefits associated with
ecological gifts, the gift must satisfy specific criteria for an ecological gift. The donor
shall be responsible for investigating the donation requirements with the Minister of the
Environment and the receiving department will request and review these requirements
to ensure the donation is appropriate. In addition, lands being donated to the Township
will require an ESA Phase 1 assessment be completed, at the donors expense, to
ensure that the lands are not contaminated (and/or whether further investigation is
required.
Donations of cultural property are items that are deemed by the Canadian Cultural
Property Export Review Board to have "outstanding significance and national
importance" to Canada. The donation of cultural property must be certified as such by
the Canadian Cultural Property Export Review Board. The receiving department shall
be responsible for making the application to the Canadian Cultural Property Export
Review Board.
DONATIONS TO SUPPORT ORGANIZATIONS INDEPENDENT OF THE TOWNSHIP:
Organizations that offer programs of genuine benefit to the community often request
that the Township receive donations on their behalf for the purpose of issuing tax
receipts.
Under the ITA, the Township cannot issue income tax receipts for funds that it will not
itself be responsible for spending. Such organizations should receive their donations
directly and register as a Charity with CRA if they wish to provide income tax receipts.
TOWNSHIP CONTROLLED CHARITABLE ACTIVITY AND COMMUNITY EVENTS:
The Township may issue charitable receipts for events held by Township-owned or
Township-controlled organizations, if those organizations meet the criteria in
accordance with CRA's expanded definition of "municipality".
a) In order to be considered an organization that is owned by the Township, the
following must apply:
- The Township must own 90% or more of the shares or capital of the
organization; or
- The Township holds title to the assets of the organization or controls their
disposition.
b) In order to be considered an organization that is controlled by a municipality, the
following must apply:
- The Township appoints more than 50% of the members of the governing
body of the organization; and
- The organization must submit its annual operating budget and, if
applicable, capital budget to the Township for review and approval.
USE OF TOWNSHIP CHARITABLE NUMBER BY ORGANIZATIONS INDEPENDENT
OF THE TOWNSHIP:
The Township often receives requests from community organizations to use the
Township's business/charitable number to establish charitable status when applying for
grant funding. Many grant programs require applicants to have a charitable status as
one of the qualification criteria. This section addresses the ITA implications to the
Township:
1. The Township, as a qualified donee, is prohibited under the ITA from
permitting third parties to use its business number/charitable number to
establish qualified donee status when applying for grant funding.
2. The Township can grant use of their charitable number ONLY when the
Township is working through an intermediary to apply for grant funding
related to a project for which the Township directs and controls both the
activities being conducted on the Township's behalf and the use of the grant
funds received. In order to use this exception, there must be a formal
agreement in place between the Township and the intermediary organization
that specifies the details of the project, the nature of the shared objectives
and that the project in an activity eligible to receive charitably donated funds
pursuant to the ITA.
ACCOUNTING FOR DONATIONS OF MONEY:
All cheque donations must clear the Township's financial institution prior to the issuance
of a tax receipt. The receipt will be made out to the same name and address appearing
on the cheque or form of payment and dated for the date received. Donations made by
cheque must be made payable to the "Township of Brock" and no third-party cheques
will be accepted.
DONOR INFORMATION/RECEIPT REQUIREMENTS:
The following information must be collected by the Township and reported on the
donation receipt:
Required Information
Cash Gift
Non-Cash Gift
Receipt must state "Official
Receipt for Income Tax
Purpose"
X
X
Serial Number of Receipt
X
X
Name of Township
X
X
Address of Township
X
X
Name of Donor
X
X
Address of Donor
X
X
Date on which the Gift was
Received
X
X
Amount of Cash Received
X
FMV of Donated Property
on Date of Gift
X
Description of Property
Received
X
Name of Property
Appraiser
X
Address of Property
Appraiser
X
Appraisers Certification
Number (if applicable)
X
Description of Advantage
Given to Donor (if
applicable)
X
Amount of Advantage
Given to Donor
X
X
Eligible Gift Amount
X
X
Place Where Receipt was
Issued
X
X
Date of Issuance of
Receipt
X
X
Signature of Authorized
Person
X
X
If a donation is made by a cheque in one or more person's names, an official donation
receipt can be made to one of the names.
Receipts given in connection with corporate donations will be given in the name of the
corporation and will not be given to individual shareholders of the corporation.
ISSUANCE OF RECEIPTS:
Upon confirmation that the donation is in compliance with this policy, the Treasurer shall
issue an "Official Tax Receipt for Income Tax Purposes" and will include all the
information outlined above in the Donor Information section of this policy.
Income tax receipts shall be issued for donations of $25 or more, unless specifically
requested by the Donor and approved the Treasurer.
The date of the donation is the date the donation is received or the title to the asset is
transferred. Donations received after December 31st may not be included in the prior's
years donation unless the donation was post marked in the previous year.
CRA ultimately determines the value of the donation which is permitted for tax
deduction and if this is different from the value assigned by the Township, the final
determination will reside with CRA.
REPLACING ISSUED OFFICIAL DONATION RECEIPTS:
If a receipt has been issued, but was subsequently lost or contained incorrect
information, the issuer is permitted to issue a replacement receipt to the donor.
The replacement receipt must include:
- All the same information required that was captured to issue the initial receipt
(see section on Donor Information/Receipt Requirements);
- The serial number of the original receipt; and
- A statement that it replaces the original receipt.
The Township must retain its original copy of the receipt that required a re-issue and
clearly mark it as "cancelled".
CORRECTING UNISSUED OFFICIAL DONATION RECEIPTS;
If the Township has prepared a donation receipt containing incorrect information but has
not yet issued it to the donor, a new receipt can be prepared. However, both copies of
the original receipt must be retained (i.e. the donor copy and the Township copy) and
clearly marked as "cancelled".
CRA/TOWNSHIP RETENTION REQUIREMENTS:
In order to maintain their qualified donee status, municipalities must keep adequate
books and records containing:
- Information to allow the CRA to verify revenues for which donors can claim
income tax credits or deductions;
- Information to allow the CRA to confirm that they meet the requirements for
qualified donee status under the ITA; and
- A duplicate of each receipt containing prescribed information for each donation
received.
If a municipality fails to maintain adequate books and records, or fails to provide them to
CRA upon request, it may have its qualified donee status suspended or revoked
entirely.
All used an unused receipts will be securely stored by the Township until needed. All
used receipts will be retained per the Township's retention by-law, which is inline with
section 5800 of the Income Tax Regulations.
CONSEQUENCES OF IMPROPER RECEIPTING:
CRA has outlined the following specific scenarios and penalties for improper receipting:
- If the Township issues an official donation receipt that includes incorrect or
incomplete information, it is liable to a penalty equal to 5% of the eligible amount
stated on the receipt. This penalty increases to 10% for a repeat offence within
five (5) years.
- If the Township issued an official donation receipt that included deliberately false
information, it is liable to a penalty equal to 125% of the eligible amount stated on
the receipt.
- If the Township is liable for penalties in excess of $25,000 for issuing false
receipts, the Township is also liable to one year's suspension of its qualified
donee status.
- If the Township contravenes or continues to contravene the receipt requirements
under the ITA, it could also have its registration revoked.
CONFIDENTIALTY OF INFORMATION:
Subject to any legislative disclosure requirements, such as in the Municipal Freedom of
Information and Protection of Privacy Act, R.S.O. 1990, all information pertaining to
donors and donations received by the Municipality are considered confidential. A donor
may request that their gift and/or all information pertaining to that gift remain
anonymous.
RESPONSIBILITIES OF EMPLOYEES:
Employees of the Township will assess potential donations for eligibility and evaluate
their benefit to the Township, considering any potential future cost implications arising
from the donation.
The Finance department will issue tax receipts for qualified donations and maintain
books and records according to the requirements of the ITA and CRA.
FINANCIAL IMPLICATIONS:
Financial implications of accepting a donation should be a consideration in the
assessment of the donation acceptance. Some of the financial costs to consider are:
1. Cost of project implementation
2. Installation of the work
3. Insurance of the property
4. Restoration
5. Ongoing maintenance
POLICY REVIEW:
This policy shall be reviewed when there is a significant change in the Canadian Income Tax
Act or regulations to that Act.
If this information is required in an accessible format,
please contact the Township at 705-432-2355.
The Corporation of
The Township of Brock
1 Cameron St. E., P.O. Box 10
Cannington, ON L0E 1E0
(705) 432-2355
Donation Agreement
This agreement is hereby entered into this ____ day of ____________, 202__, between
________________(donor) hereafter called "Donor", and The Corporation of the Township of Brock (donee)
hereafter called the Donee.
The Donor and the Donee, hereby agree to the following:
The Donor is donating __________________________________________________________(description
of item) to the Donee. The Donor warrants that they own the item being donated to the Donee.
By making the donation, the Donor recognizes and understands that the item described above, is now
legally owned free and clear by the Donee.
The Donee will be responsible for making any and all decisions related to the donated item, independent of
Donor.
The Donee has performed its due diligence in accepting the item and agrees to assume legal ownership
from the Donor.
Signed this date ____________________, in the ______________________________.
Donor Signature ________________________________________________________
Donee Signature _________________________________________________________