Tax Tip: Donating Items Rather Than Cash

In a recent Tax Court of Canada case, the taxpayer donated several bottles of wine to a registered charity over three years and received donation receipts totaling $10,700 for the fair market value (FMV) of the wines. The FMV of the wines for the donation receipt was evaluated by a sommelier who was a graduate of the Oenology Faculty of Bordeaux. CRA significantly reduced the donation receipts by a total of $7,331 based on their separate valuation.

The Court accepted the taxpayer's valuation of the wines noting that the Crown did not produce evidence contrary to the taxpayer and failed to raise doubts about the credibility of the Appellant's testimony.

Action Item: If donating large value items, ensure that the amount listed on the donation receipt is backed by credible proof or valuations.