Canadian definition of products for donation purposes
September 5, 2009 2:12 PM Subscribe
Canada Donation Filter: Can you donate a productized service and have it count as an in-kind donation to a charity?
posted by acoutu to work & money (5 answers total) 2 users marked this as a favorite
Services are exempt from in-kind donations under CRA rules. But what about the donation of a tangible product? For example, what if a freelance writer provided a tangible product, such as a finished article in Word format? This is not a service, since it's an actual "thing". Or what if a consultant donated a report and not the services involved in developing that report? Or if a graphic designer donated a newsletter template or finished newsletter? These things could be sold on a website -- lots of consultants sell templates, ebooks, reports and such on demand.
It's unclear to me how these products would be treated under tax laws. For example, if you donate an ebook, which is a product, would that be eligible?
When I read CRA definitions, they seem not to get into how they define products, other than for capital or personal use. And certainly something like an oil change or haircut is a service and not a product. And CRA would not want volunteers to start writing off all the time they spend working in hospitals, at ticket booths and so on. But I am not talking about volunteer time. I'm talking about donation of an actual finish product. Is a report or ebook like a handmade wooden table, if there is a market value for the finished product?
When I worked for a charity some years ago, I did note that my boss did some sort of write off for donations of services by using some sort of definition of products. But I have no idea whether that was legit.
Note: If you're in the US, please note that your tax laws are different. I understand that, in the US, services can be donated at fair market value. But, in Canada, we can only donate products.