Christmas Spirit:  Over 70,000 Canadians Audited

At this time of traditional giving, CRA is urging Canadians to exercise caution when donating to charity as the holiday season approaches, by avoiding fraud and tax receipts worth multiple times more than the actual donation. To avoid an unexpected tax headache down the line, Canadian taxpayers and their advisors should review the rules when giving to their favorite charity this holiday season:

1. Confirm Registered Charity status: Consult the CRA Charities Listings or call 1-800-267-2384.

2. Get proper receipting: An official donation receipt for cash must include a statement that it is an official receipt for income tax purposes, the name and address of the donor, the CRA registration number (Business Number) of the charity, the amount of the donation, the year of donation, the CRA name and charities website and a unique serial number. In-kind donations must include the fair market value of the gift.

Contribution of your time or skill, fees for day-care, purchase of lottery tickets where proceeds benefit a charity and payment of certain tuition fees do not qualify.

3. Avoid Charitable donation schemes: CRA reviews all tax shelter arrangements, which by definition include tax shelter donation arrangements such as gifting trust arrangements, leveraged cash donations, and buy-low, donate-high arrangements. CRA routinely reduces the tax credit claimed to the amount of the taxpayers' cash donation or less, and may also charge interest and penalties. To date, the CRA has denied approximately $1.4billion in donations claimed, auditing over 70,000 taxpayers.

Canada Revenue Agency provides detailed information on its website on fraud avoidance. Of particular interest are the 3 videos in the series Giving to Registered Charities 101. They offer an easy to understand look at the benefits of giving as experienced by both the donor and the recipient. This is an ideal introduction for teens and young adults ñ CRA even has a YouTube channel!

http://www.cra-arc.gc.ca/chrts-gvng/dnrs/menu-eng.html

ADDITIONAL EDUCATIONAL RESOURCES: EverGreen Explanatory Notes and the Knowledge Bureau certificate course: Fundamentals of Charitable Giving