TaxCycle | Products | Pricing | Training | Documentation | Support | News

Donations (contributions) to a for profit corp - Revenue?

*Techincal question

A for-profit corporation has received very small amounts of donations totaling $700.
The donations were received because the for-profit corporation has a sustainability initiative (environmentally friendly mission).

There is no exchange of goods except some free promo items given out (t-shirts, pens, etc), no restrictions on the donations, and no tax receipts provided.

If treated as revenue can anyone recommend where in the T2 this amount will go?

Thanks kindly

Post deleted.

Yes. Included in income. Possibly offset by tax credits or programs.

1 Like

I would include $700 in business income.


Ditto @obhorst

And, really - I would expect it to have been recorded in the corporate bookkeeping. If it was not included in the trial balance the client gave me, I would include it in my year-end adjusting journal entries that I give to the client at the end of the engagement.

1 Like

You’d include it in Sales and also write off the expenses of the initiative, which would include the freebies the donor received.

1 Like

Ok, now what about GST/HST?? Somebody gave you money. You correctly record it as income. You also have to factor out the tax.

1 Like

Why? Is there tax in every transaction? I think not.

1 Like

It is a donation, not a true sale = no GST/HST

You create an account for “Project income” and another for “Project expense” both in the income section of the Chart of accounts. Take the GST/HST on the expenses.

It will then be reported as “Project income, net of expenses” on the financial statements when year end rolls around, and included in Sales on the T2.

1 Like

I’d check to see if you feel the receipt can be seen as a windfall (The Queen v. Cranswick, 82 DTC 6073 (FCA)). Maybe it’s not taxable at all.

1 Like

Definitely taxable income if run through a business, to the extent not fully expended:
CRA Rulings 2013-0484941E5.

Silent so far (at least AFAIK) on GST. I have a client who has done the same thing for a number of years and we always ensure that the receipts are expended by the end of the year.

1 Like

Very much appreciate the case reference

Very much appreciate the CRA reference

Very strong accounting! @dklassencga

1 Like