Overview
Kindful Ensures CRA Compliance for Canadian users. Read on below for more information on the following:
- Understanding CRA Tax Receipt Guidelines
- Definitions
- Using Kindful’s Official Tax Receipting
- Issuing Official Tax Receipts
- Special Cases
Linked Articles:
- How to Send End of Year CRA Tax Summaries
- Finding Gifts That Can/Cannot Be Receipted
Why your Canadian charity should issue tax receipts
According to the CRA, donors can use receipts to save taxes in the current taxation year or they can carry them forward for 5 years. The CRA suggests that registered charities create receipts by February 28th of the calendar year that follows the year of the donation. This allows individual taxpayers to claim their donations on their annual income tax returns. A registered charity may create receipts periodically throughout the year or, for cash donations only (excludes Non-Cash Gifts), issue one cumulative receipt for the year.
Cash Donation Tax Receipt Requirements
Per the CRA, official donation receipts for income tax purposes must contain the following elements:
- A statement that it is an official receipt for income tax purposes
- Name and address of the charity as on file with the CRA
- Charity’s registration number
- Serial number of the receipt
- Place or locality where the receipt was issued
- Day or year donation was received
- Day on which the receipt was issued if it differs from the day of donation
- Full name, including middle initial, and address of the donor
- Amount of the gift
- Value and description of any advantage received by the donor
- Eligible amount of the gift
- Signature of an individual authorized by the charity to acknowledge donations
- Name and website address of the CRA (http://www.CRA.gc.ca/charities)
Additional Non-Cash Gift Receipt Requirements
For Non-Cash Gifts (gifts-in-kind), official donation receipts should contain the following additional elements:
- Day on which the donation was received (if not already indicated)
- Brief description of the property transferred to the charity
- Name and address of the appraiser (if property was appraised)
- Deemed fair market value of the property
CRA’s Definition of Donation
In Canada, a donation must meet these four conditions:
- Voluntary: If a donation is made as a result of a contractual or other obligation (for example, a court order), it is not eligible for a receipt.
- A complete transfer: It is not enough to pledge that you will one day give something to the charity, or to provide the object but not do everything required to change the ownership. For example, it is not sufficient to provide a house and key to a charity – someone needs to arrange that the house is completely transferred over to the charity at the land titles or registry office.
- Property: Property includes cash, checks, credit card, money order, wire transfer, and certain tangible items—such as computers, furniture, cars, or land—but it does not include services.
- Intention to make a gift: Under the Income Tax Act (Canada), if a donor receives an advantage that is greater than 80% of the donation, then generally it is assumed that there is no intent to donate and the person should not receive a receipt.
Calculating the Donation Advantage
In order for contacts to appear on the Tax Summaries Tool, one of the required criteria in the Tax Summary calculation is that the sum of the contact’s gross transaction amounts minus the sum of their non-tax deductible amounts must be greater than 20% of the sum of their total transactions for the applicable calendar year.
To measure which contacts do/don't qualify for the donation advantage, you can use the following Contacts filters to view the people whose transactions do not qualify:
(As a note, the filter Has CRA Compliant Transaction in Year: 2020 above is inverted. If you do not know how to invert a filter, you can learn how on our article below.)
Inverting and Adding Additional Values a Filter
Record Types in Kindful
Activities – All transactions and interactions that can be tracked in Kindful. Activity types include Transactions, Non-Cash Gifts, Pledges, Soft Credits, Notes and any interactions from your connected integrations.
Contacts – All people and organizations you interact with. They may be donors, prospective donors, volunteers, advocates, etc. We have two types of contacts in Kindful: People (individuals) and Organizations (foundations, businesses, etc.).
Non-Cash Gift – Transaction activity representing a Non-Cash Gift entered manually into Kindful via the Add New > Non-Cash Gift dialog. A Non-Cash Gift must be associated with a contact record in Kindful.
Transaction – A transaction record in Kindful representing a payment, purchase, or, most often, a donation. A Transaction must be associated with a contact record in Kindful. Also known as a Transaction activity.
- Online Transaction – A credit card transaction made via your Kindful hosted donation page, donation plugin, or the Admin “Charge” function.
- Manually Entered or Imported Transaction – Entered manually into Kindful via the Add New > Transaction dialog or via an import.
Transaction Settings
Receipts – Kindful is used by Canadian and non-Canadian users alike. Some features, like Receipts in Transaction Settings, work differently depending on where your charity operates. For example, in the USA, Receipts function as simple confirmation letters and Official Tax Receipts are not available. More on this later in the article.
Receipt Template – Letter template used for donation confirmations and receipts. If set to No Selection, the Kindful default template will be used.
Official Tax Receipt Template (Canada only)– A template with full support for CRA Compliance, including ID sequencing, information safeguards, and additional receipt management functionality for Canadian Users.
General Settings
Organization Name and Address - Used for Official Tax Receipts. Ensure this is accurately set to your charity’s real name and address.
Transaction Signature Image – Used as the Authorized signature for Official Tax Receipts.
Tax ID (Canada only) – Used for Official Tax Receipts. You’ll add your CRA# in this field.
Receipting in Kindful
Receipt Actions – Options on Transaction and Non-Cash Gift activities enabling users to print receipts, email receipts, void receipts, and replace receipts. Viewed when expanding an activity on the Activities page, or from the dropdown menus in Recent Activities on the Dashboard. There is also Email Receipt functionality on the Add New > Transaction and Add New > Non-Cash Gift functions.
Issue Receipt – Using Kindful to issue an Official Tax Receipt for a donation. An Official Tax Receipt is issued when you click Email Receipt or Print Receipt.
Replace Receipt – Using Kindful to issue a replacement Official Tax Receipt for a donation that’s already been issued an Official Tax Receipt. A replacement Official Tax Receipt is issued when you click Email Receipt or Print Receipt on an “already-receipted” Transaction or Non-Cash Gift.
Void Receipt – Using Kindful to void an “active” Official Tax Receipt for a donation that was previously issued an Official Tax Receipt. No replacement receipt is issued.
Using Kindful’s Official Tax Receipting
Kindful helps ensure your charity complies with CRA Requirements
Before an Official Tax Receipt can be issued for a Transaction or a Non-Cash Gift, Kindful will check that the information required for the Official Tax Receipt is stored in your system and available. In other words, Kindful will only issue an Official Tax Receipt when all the required fields are present on the Transaction/Non-Cash Gift record and associated Contact Record, and when Official Tax Receipt Mode is enabled.
How to Enable CRA-Compliant Tax Receipts:
Official Tax Receipt Mode is only available to charities based in Canada with a paid Kindful account.
In General Settings:
- Add your Tax ID/CRA # in the Tax ID Field on General Settings.
- Enter a postal code and ensure your account’s Country is set to Canada.
- Upload a Transaction Signature Image in General Settings. This will be used as the Authorized Signature on your Official Tax Receipts. First, you'll need to create a JPEG file of the signature you want included in Official Tax Receipts. You can do this easily by signing your name on a piece of white paper and taking a photo with the camera on your phone or computer. If you take it on your phone, email it to yourself so you can open it on your computer. Once you have the signature photo on your computer, go to Settings in Kindful, then General Settings. Scroll to the Images section, and the last option you'll see is Transaction Receipt Signature Image. Upload your signature image here.
- Be sure to hit the Submit button on General Setting to save your work!
In Transaction Settings:
- In the Receipts section, enable the “Include PDF…” option.
- Set the PDF Receipt Template to Official Tax Receipt. Note: the Official Tax Receipt template is available to Canadian Kindful accounts only.
- Be sure to hit the Save Receipt Settings button to save your work!
You’re now in Official Tax Receipt Mode.
Issuing Official Tax Receipts
You have the ability to issue an Official Tax Receipt for donations that already exist in your account on the Activities page. You can issue an Official Tax Receipt from the transaction or Non-Cash Gift via the Email Receipt and Print Receipt options on the specific activity.
These can only be issued in a one-off basis. The only bulk option is the end of year tax summary tool. Other than that, for singular receipts, the receipts are sent individually.
Issuing an Official Tax Receipt for a specific activity on the Activities page:
- Navigate to the Activities page.
- Click the down arrow just to the right of the donation amount to reveal the receipt options.
- If no Official Tax Receipt has been issued for the donation, selecting Email Receipt or Print Receipt will issue a new, active Official Tax Receipt.
- Selecting Email Receipt will issue the Official Tax Receipt and will be sent via email to the donor.
- Selecting Print Receipt will create an Official Tax Receipt PDF and make it available for download to your computer.
As described above, the Non-Cash Gift Official Tax Receipt requires a description of the property transferred to your charity, the name and address of the appraiser of said property (if appraised), and the fair market value of the donation. Appraisal information is not required but strongly encouraged by the CRA. If you do have appraisal information, Kindful ensures that both the appraiser name and appraiser address are captured. If you enter information in one field, you will be required to enter information in the other so that your receipt complies with CRA requirements.
To email an Official Tax Receipt for a Non-Cash Gift, you’ll need to provide a description of the property at a minimum.
Kindful’s Transaction Requirements for the Official Tax Receipt
These are the required fields in order for a transaction to qualify for a tax summary.
- Contact (the donor)
- Transaction Amount
- Campaign
- Contact
- Date
- Transaction Type
- Amount (CAD)
- Non-Tax Deductible Amount (required if greater than $0.00)
- Non-Tax Deductible Amount Description (required if Non-Tax Deductible Amount is greater than $0.00)
Kindful’s Contact Requirements for the Official Tax Receipt
These are the required fields in order for the contact to qualify for a tax summary.
- First Name & Last Name
- Address (Street Address, City, State, Postal)
- Email is required for emailing the Official Tax Receipt, but optional when generating and printing a PDF Official Tax Receipt
Replacing Receipts
CRA Guidelines for Replacement Receipts
If a registered charity has issued a receipt that was lost or contained incorrect information, the charity can issue a replacement receipt. The replacement receipt must include:
- All the required information
- The serial number of the original receipt
- A statement that it replaces the original receipt
How to Replace Official Tax Receipts in Kindful
Kindful ensures compliance with CRA requirements by issuing a replacement receipt for the current Official Tax Receipt while also voiding the current Official Tax Receipt. If an active Official Tax Receipt is already issued, meaning you or someone on your team has emailed or printed an Official Tax Receipt for a donation, selecting Email Receipt or Print Receipt will work the same way described above with one important difference: the active receipt will be voided and replaced with a new Official Tax Receipt. The replacement Official Tax Receipt will look very similar to the original receipt but with the added statement to indicate that it replaces the previous receipt.
If a donation has an active Official Tax Receipt, clicking Print Receipt does the following:
- Marks the active Official Tax Receipt as voided in Kindful
- Creates a new Official Tax Receipt containing a reference to the most recent previous Official Tax Receipt associated with this donation
- The Official Tax Receipt PDF contains the statement "Replaces Receipt #xxxx", where #xxxx is the ID of the Previous Official Tax Receipt
Voiding Receipts
You can void receipts by clicking the Void Receipt button. If there is an active Official Tax Receipt for a Transaction or Non-Cash Gift, there is a Void Receipt option in the expanded activity on the Activities page.
Selecting Void Receipt will launch a confirmation dialog, with options of Cancel and Void Receipt. Cancel closes the dialog; the associated receipt remains active. Void Receipt will void the Official Tax Receipt; no replacement tax receipt is issued.
Keeping Records of Tax Receipts
Charities must keep copies of all tax receipts for two years after the year for which the receipt was issued. If electronic tax receipts were issued, charities must be able to reproduce electronic copies of them for these time periods.
Kindful stores all Official Tax Receipts on secure servers and can provide you with an export of all issued receipts for the calendar year, void receipts included, in the case of an audit by the CRA. Learn more about Kindful’s data security practices in this article.
Special Cases
Donation “Advantage” (known as Non-Tax Deductible Amount in Kindful)
An advantage is what a donor may receive in return for his or her donation (for example, a meal or tickets to a show), and it must be taken into consideration when determining the eligible amount of a gift for receipting purposes.
Determining the fair market value of an advantage is similar to determining the fair market value of a gift in kind. However, while only donations of property can be receipted as gifts in kind, the fair market value of any type of advantage (for example, services, accommodation, or meals) must be taken into consideration when determining the eligible amount of a gift for receipting purposes.
If the value of the advantage is 80% or less of the fair market value of the donation, then a receipt may be issued for the difference. If the value of the advantage is greater than 80% of the value of the donation, no gift is deemed to have been made, and a receipt cannot be issued.
If the value of an advantage is not more than $75 or 10% of the value of the donation (whichever is less), it is considered nominal (de minimis), and it need not be deducted from the amount of the gift for receipting purposes. If the fair market value of the advantage cannot be determined, a receipt cannot be issued.
Use your best judgement on when to issue Official Tax Receipts for donations. Kindful allows receipts to be issued regardless of the advantage-to-gross amount ratio including de minimis transactions. If a receipt is issued for a de minimis transaction it will not comply with the CRA receipting guidelines.
Determining if a donation is “receipted”
When a receipt is issued for a donation (a Transaction or Non-cash Gift), a status will display on the activity to indicate it’s receipted. You’ll notice the activity can’t be edited so to ensure compliance in the case of an audit. Kindful helps ensure your donation record matches your receipt record during reconciliation.
How to Replace an Active Official Tax Receipt
Each time the Email Receipt or Print Receipt option is selected on an activity, a new replacement receipt is created. Clicking Print Receipt for a Transaction or Non-Cash Gift will issue an Official Tax Receipt if it’s not yet receipted; in other cases a replacement receipt will be issued.
Permissions and Official Tax Receipting
Both Account Owner and Staff users can issue Official Tax Receipts. View Only and Basic Data Entry users cannot issue Official Tax Receipts.
Historical Receipts
You cannot import receipts for a transaction or Non-Cash Gift.
Transactions receipted with Official Tax Receipts cannot be edited or deleted
To ensure compliance with the CRA and to ensure your charity can adequately respond to an audit by the CRA, Kindful prevents transactions with associated Official Tax Receipts from being deleted. Even if the Official Tax Receipt is voided, there will not be an option to delete the transaction.
Ensure your account has all requirements configured correctly by reviewing the Official Tax Receipt account requirements.
Merging Contacts
To help better manage your donors, Kindful’s Contact Duplicates tool enables users to merge duplicate contacts in Kindful. When merging a duplicate into a primary contact when the duplicate has an Official Tax Receipt, the Official Tax Receipt will be assigned to the new target contact.
Non-Cash Gift Appraisal Information
If the fair market value is expected to be more than $1,000, the CRA strongly recommends that the property be professionally appraised by a third party (that is, someone who is not associated with either the donor or the charity). Appraisal is not required by the CRA but if the property is appraised, the name and address of the appraiser must be included on the official donation receipt. When adding a Non-Cash Gift in Kindful, appraiser name and appraiser address are not required. However, if a value is present in one of the appraisal fields, the other will also be required.
Issuing Official Tax Receipts for Transactions Made Through the Donation Plugin
To issue an Official Tax Receipt for a donation entered in Kindful through the donation plugin, ensure an address has been entered for the contact, and select Email Receipt or Print Receipt in the expanded activity on the Activities page.
Letter Templates using the {transaction_amount} tag
The Transaction Amount tag can be inserted in your letter templates to include the amount of the Transaction in the body of the email. If you're planning to track Non-Cash Gifts in Kindful, you’ll want to remove this tag from your templates so you’re not thanking the donor for a transaction amount when they actually gave a Non-Cash Gift.
For example, if a donor gave your organization a computer with an appraised value of $1,000 and your template uses the Transaction Amount tag, the donor would receive an incorrect email saying “Thank you for your donation of $1,000.”
Note:
If you joined Kindful prior to this process for sending official tax receipts, Kindful may have performed custom services for you to customize your TRANSACTION_INFO_FOR_RECEIPT tag to be compliant. Moving forward, you will want to remove this tag from the template you use.
Apply any template with any content (without using TRANSACTION_INFO_FOR_RECEIPT), and the Official Tax Receipt attachment will be your CRA compliant solution.
Example Receipt
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