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Donations and gifts
GST/HST does not apply to donations and gifts. A donation or gift is a voluntary transfer of money or property for which the donor does not receive any benefit in return. Sometimes, the donor receives property in exchange for the donation. This donation would still not be subject to GST/HST if the property has little or no resale value such as a key ring, a pin, or an envelope seal. However, if the donor receives a good or service of value in return, the payment may be subject to tax.
Grants and subsidies
As a non-profit organization, you may receive grants, contributions, subsidies, and similar payments. Often referred to as transfer payments, these are given for many different reasons, ranging from a simple contribution made to a non-profit organization, to major government-funded projects. Usually, when transfer payments are made in the public interest, or for non-profit purposes, we do not regard them as payment for a supply and, as such, there would be no GST/HST on the payment.
Generally, GST/HST does not apply to grants and subsidies your non-profit organization receives. However, if there is a direct link between a payment you receive and a supply you provide to either the grantor of the transfer payment or to a third party, the transfer payment may be regarded as payment for a supply. If this is the case, the transfer payment may be taxable, and tax may need to be collected on the amount.
Since the tax treatment of transfer payments may be complex and will be determined on a case-by-case basis, call us or see our Technical Information Bulletin B-067, Goods and Services Tax Treatment of Grants and Subsidies, for more information.
Donations, grants, subsidies, and sponsorships do not affect your non-profit organization's entitlement to GST/HST rebates or ITCs.
Sponsorships
Non-profit organizations often receive sponsorships from businesses to fund their activities. In return, the non-profit organization may provide promotional services to the sponsor or may allow the sponsor the right to use its logo, trade name, or any similar intellectual property.
GST/HST does not apply to these sponsorships except when the payment made by the sponsor is primarily (more than 50%) for advertising on television, radio, in a newspaper, magazine, or other publication issued periodically.
Example 1
A corporation agrees to sponsor a non-profit soccer team. In return, the non-profit organization agrees to advertise the corporation's trade name on the team's uniform.
Example 2
A corporation agrees to sponsor a non-profit organization's sporting event. In return, the organization allows the corporation to print the organization's logo on the corporation's products.
We do not consider a payment you receive from a sponsor to be payment for a good or service. Therefore, the payment is not taxable or exempt. It is simply not subject to tax.
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Date modified: 2006-06-26 |
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