Bequesting to a Charity

You want to make a bequest to a charity or charities in your will. When you ask your lawyer to draft the bequest clause, ask him or her to also:

  1. Identify the correct name of the charity in a corporate database;

  2. Verify with the CRA Charities Directorate that the Charity has charitable status;

  3. Review the gift and investment policy of the recipient Charity (if bequeathing gifts of property other than cash);

  4. Consider whether it is more advantageous to make some gifts while still alive (if the bequests are a large part of the estate, the tax receipt may be a lot more than the income in the year of death, thus losing out on some tax benefits);

  5. If you want to put any restrictions on the charitable bequest, verify with the charity that the bequests are acceptable;

  6. Decide if you want a copy of the relevant excerpt in the will be provided to the Charity;
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Issuing a tax receipt to another charity

Q. We (a registered charity) just received a sizable donation from another registered charity (a private foundation). Should we issue them an official donation receipt?

Quick Answer: No.

Comprehensive Answer: Charitable receipts are required for tax deduction or credit purposes only. Registered charities however, do not pay income tax, ergo, they do not need a donation receipt.

Note: For relationship purposes, you may (or perhaps should) acknowledge the gift by way of letter. Also, you should provide your charity’s registration number to the donor charity, as it will need it for its reporting requirements.

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When can I start issuing tax receipts?

Q: I just applied for charity status from the CRA. Can I start issuing tax receipts?

Quick Answer: There is no quick answer...

Comprehensive Answer: The CRA has the discretion to backdate the date of charity registration to one of the following:

  • the date of the organization's incorporation (if the charity is organized as a corporation)
  • the date of the organization's application;
  • the first day of the charity's current fiscal period; or
  • The day of the charity’s last revision of its articles.

Your Charity Lawyer can put in a request for the charity registration to be backdated to the earliest of the above dates. But keep in mind, it is up to the CRA’s discretion.

Do you have questions about Canadian Charity Law? Email or call us at the link on your right.

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