Avoid a CRA Audit when Claiming Charitable Donations
Have you made a donation to a good cause? Have you been approached about making a gift? Charitable giving is an important part of Canada’s social fabric. Unfortunately, there are also unscrupulous individuals who are seeking to benefit from the good will of others. To ensure your gift has the desired impact, and to avoid a CRA Audit and possible CRA garnishment, make sure the donation meets the legal criteria or contact a Tax Accountant to fix errors though a Voluntary Disclosure.
Canada offers a charitable donation tax credit to taxpayers giving a gift to a qualified charity. However, in order to be able to claim a deduction a number of criteria have to be met. If a past deduction doesn’t meet these criteria you risk interest and penalties that can be avoided though a Voluntary Disclosure. The first is that you have to make a gift, meaning that you cannot receive a benefit other than the tax receipt for your donation. If you’ve been offered a deduction in excess of your donation, you have not made a gift and won’t be able to claim a credit. The second is that the gift has to be to a charity registered with the CRA. You can check the CRA site to make sure the organization is legitimate (http://www.cra-arc.gc.ca/chrts-gvng/lstngs/menu-eng.html). A third criterion is that you have to receive a receipt that contains prescribed information, including the fair market value of your gift, a serial number, your name, and the name of the charity issuing the receipt. The last is an absolute requirement and if your receipt is missing any of the required information, your gift won’t qualify for the tax credit.
If you are unsure of a future or past donation claim, contact a Toronto Tax Accountant. A professional Accountant can help you fix past mistakes though a Voluntary Disclosure or tell you whether the donation qualifies. Don’t harm yourself or your family through good intentions gone wrong. Protect yourself from a CRA Audit by talking to a CPA Tax.
Disclaimer: Articles are for general information only and do not constitute tax advice. They cannot be relied upon.
Sam Faris is a Toronto-based Chartered Professional Accountant who practices as an independent consultant on high-level Canadian tax matters and handles disputes with CRA. He has recently published an article a business magazine: HERE.