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@Carolla , I am going to inquire specifically on the cottage auction, but the scenario you outlined is explained in the link.

The buyer should not get a receipt.


Our charity held an auction where various items were being auctioned to raise funds for our charitable programs. The auction was being handled by an auction house. Would the buyers be eligible for an official receipt for income tax purposes?

Generally, a receipt should not be issued to the buyer because the price paid is considered to be its actual value in circumstances typically surrounding a sale to the highest bidder, meaning that no gift was made. However, there can be certain situations where it can be established that the buyer otherwise knowingly paid more than the item was worth, and therefore made a gift.
 
and....


11. An artist offers a painting that is then sold at auction. The painting was not appraised. Can we assume that the fair market value of the painting is the price obtained at auction?

No, you cannot. You must actually determine the fair market value before the auction in order to issue a receipt to the artist. By knowing the fair market value, you will be able to issue a receipt for the true value and, even if the painting is sold at auction for less or more, the artist will only receive the fair market value.
 
The buyer does not get a tax receipt. They got an item for their money

the donor of an item to an auction gets a tax receipt but does need to provide documents. We did this one year. Donated a time share week we had. We were able to give the church the posted weekly rate if you rented it.
a cottage could be donated as an auction item, as long as they could provide documents of rental fees paid
 
Usually items like painting the artist can show other paintings sold as comparison.

it can be tricky at church silent auctions. When I was stewards we would have people wanting receipts for what the item sold for. Which has no bearing on its value at all
 
Pinga said:
ie, if i decide to donate my beautiful embroidered last supper that my great-grandma made
Click to expand...
Haha, I wonder how many churches have a basement full of those last suppers. I remember a council meeting where a very well known member brought a very ugly Last Supper picture he had received from a relative ( and appearently didn’t want to have in his own house) but because nobody wanted to hurt his feelings, they accepted the donation. That’s almost good for its own thread, -what to do with the stuff you don’t want?
When my old congregation amalgamated, all those donated items where a big emotional ballast which took months to get rid off.
 
OFFS why does life have to be so complicated?

My apologies. I'm sure there are good reasons.
 
Largely, to make life easier, strangely enough.

If you don't have clear policies and procedures in place, you're reinventing the wheel every time there's a question.

On the other hand, we had a truly ghastly painting (to make my own prejudice clear, it was a saccharine picture of Mr. Blond Jesus blessing a pile of equally Aryan children) disappear from the nursery after some renos/work, and there was hell to pay until the horror showed up again. It haunts the infants still.
 
Carolla, actually, the auction stuff is really important. Lots of churches do silent auction, and so , I am adding two scenarios and following up with CRA regarding them.
 
Hi, I made the call and got clarification.



  • An individual owns a cottage. They offer a one-week rental for a charity auction for the church. The cottage normally rents for $2000 / week, and there is evidence that it does by rental history. The auction only brings in $500. How is it accounted for? Two things must have been done in this item. The Fair Market Value of $2000 must have been proven by the seller, and the purchaser must be aware. If so, then the donor could be given a receipt for $2000. (Important to note the two conditions, including disclosure of the value on the auction form) The purchaser does not get a receipt for the $2000 as that is just an item purchase. If; however, the cottage week sells for $2500, the purchaser would get a receipt for $500 and the cottage owner a receipt for $2000.
  • An individual has a house painting business. They offer a gift certificate of $500 for a charity auction. The gift certificate sells for $500. Can a receipt be issued? At the time of sale, no donation receipt can be issued. The purchaser has received an item of value worth $500. Can the house painting business get a receipt at time of the sale of the gift certificate. No, at that time there is no property being transferred. At the time, though, when the purchaser of the gift certificate redeems it at the house painting business, the issuer of the gift certificate can be given a receipt for the full amount. Donation of gift certificates or gift cards - Canada.ca
 
Accounting when chartered under the law ... is a complex business no matter how folks try and simplify it!

Some just will not go there as complexity is the root of xenophobia ... and there is no end to what we don't know ... or have forgotten by denial and exclusion!

Did you know that the Hebrew held great respect for what they didn't know ... the great unknown god of sorts?

We have politicians today that believe they know all and can circumvent anything and everything ... and they have conforming followers! Why? The followers don't understand and don't wish to ... thus that is disposed of when discernable ... lest we fail to forget what is painful!
 
Pinga said:
Carolla, actually, the auction stuff is really important. Lots of churches do silent auction, and so , I am adding two scenarios and following up with CRA regarding them.
Click to expand...
Yes, that really would be important for the church to make clear to everybody.
I remember from two auctions, at one I as the purchased got a charitable receipt over what I spent on the item at the other I didn’t ( not sure if the person donating the item did). Considering that it often is always the same people who provide baked goods, sometimes in large amounts, I think it would be good to have clear rules. Unless the whole charity tax status goes away and nobody can tax deduct anything. I always found it unfair why donations to political parties count so much more than to churches work.
 
And this, folks, is why I have never been on the church's finance or auction committee (a silent services auction is one of the local UUs main fundraisers). Accounting is not my strong suit to start with so I think it best to leave those to the folks who have the knowledge and experience or the inclination to learn it.
 
I get it. I inherited a situation. Seeking clarity of this type of information, including the places that anyone can go for guidance has been essential.
 
Pinga said:
Carolla, actually, the auction stuff is really important. Lots of churches do silent auction, and so , I am adding two scenarios and following up with CRA regarding them.
Click to expand...
Fair point. Perhaps the auction stuff could even be its own document or subsection - rather than 'buried' in info re gifts in kind. They are related, and I can see that they would both be important.

I'm with you @Mendalla on financial literacy!
 
A couple of local charities do auctions. I think they ask businesses and artists to donate an item and submit a bill for the estimated value. They get a receipt for that amount and the charity gets whatever is finally paid for the item - usually more than the declared value.
 
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