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Some businesses ask for donations when our bill is due. Are these companies entitled to tax deductions for donations collected from their customers, asks Michel Mathieu?
“Would you like to donate two dollars to help sick children?” » This is the kind of proposition that the cashier or the self-service payment terminal at your grocery store can make to you.
If your generosity takes over at this point, the little polar bear will normally fill an account with the entire balance donated to the relevant charity, sometimes the company’s own foundation. For such a small donation, this organization will not give you an official receipt giving entitlement to a tax credit. But what about the store that collected and passed on the pot made up of all the donations from its customers?
The response from the Canada Revenue Agency is clear on this subject: “It is the customers who make the donations, not the retail store. Therefore, since customers are the real donors, the retail store would not be entitled to a receipt when giving the money collected to the charity. »
Centraide of Greater Montreal, which has a partnership with Metro, explains that it receives separate amounts from the retailer depending on whether they come from customers, employees or the company itself.
“When it comes to donations from lots of different people, we can’t give the company a global receipt for that,” explains Maud Doualan, vice-president of philanthropic development for Centraide of Greater Montreal.
Advantageous
For charitable organizations, this type of donation is advantageous. Since they do not have to do any solicitation work themselves and they do not have to produce a tax receipt, this strategy generates few management costs.
“It allows us to ask the question to people we wouldn’t otherwise reach. It’s great visibility for our cause,” adds Maud Doualan.
It’s the same story with Mission Inclusion, formerly known as L’Oeuvre Léger. The organization has already partnered with merchants who raised funds for its humanitarian and community projects as part of the GivingTuesday campaign.
Mission inclusion has also launched another model, called “cause marketing”, in collaboration with Boustan. The fast food chain has committed to donating 50 cents to the organization for each children’s meal sold.
“What is interesting is that the merchant can obtain a tax receipt, unlike donations at the checkout,” indicates Isabelle Morin, senior director of development and communications for Mission inclusion. “Boustan used this a lot to highlight his corporate social responsibility,” she added.
A question of image
In practice, there is no rigorous verification mechanism that would prevent companies from appropriating the money collected from customers and organizations from giving them a tax receipt for this sum, according to François Brouard, professor of accounting and taxation at Carleton University. But there is a great risk that the situation will be reported and that this will damage the reputation of the company.
“I’m not sure it would be a good idea to take that risk, especially for a company that has some stature in the community, given that the profit is elsewhere. It is in the big check that it will highlight in its communications,” indicated Mr. Brouard. For companies, the interest would essentially be a question of image, he believes.
He does have some advice to pass on to individual donors. “If you give $2 every time you go grocery shopping, fiscally speaking, you would be better off donating $100 once a year to the foundation of your choice. »
You will be able to receive a tax credit, if this is something that interests you.