Income Tax Receipts Deadline
In case you need a reminder, the deadline for charities to issue their 2022 income tax receipts is quickly approaching.
The 2022 Income Tax Receipts Deadline is February 28, 2023.
Issuing tax receipts in a timely manner is an important task within the stewardship journey.
If your staff cringes at the thought of generating tax receipts or the process is not streamlined, use the steps below to help simplify the process:
Data Accuracy – Ensure your tax receipts are addressed to the correct donor. Sometimes determining who the "true donor" is not as simple as it sounds. For example, if a donor sends $1,000.00 but does not include a list of donors, amounts and addresses. Your organization cannot issue tax receipts as the "true donor" cannot be determined.
Canada Revenue Agency (CRA) has a great infographic to help you make the correct decision. Use this link for more information: https://www.canada.ca/content/dam/cra-arc/serv-info/charities/true-donor-infographic-eng.pdf
Tax receipt copy – issuing tax receipts provides another opportunity to connect with donors. I know what you are thinking "…nobody cares about what you write all donors want is their tax receipt". You may be correct, but don't squander this chance to connect with your donors. This may be an excellent time to announce your next big event or confirm your email address for tax receipting. Also, tell a donor about what programs or services have accomplished with their donation. Let's not overlook a chance to write a personal message.
Database Tip: use your database to track what donors have received a personal message. Does this increase engagement? Studies show personalization makes a difference. Do not take anyone's word for it; start tracking and learn for yourself.
Types of Receipts – what approach should your organization take to issue receipts? One receipt for every donation or cumulative receipts? CRA does not specify which contributions should be receipted or how they should be receipted. A good rule of thumb, stock donations, gifts in kind, or event donations with an advantage should not be included in cumulative receipting. These donation types require additional information to be included on their receipts; therefore, one receipt per transaction is advisable. This option will allow you to include all the information required as per CRA.
Mail or Email receipts – If you currently mail your tax receipts, you may want to take this opportunity to offer electronic receipts in the future. If you currently provide electronic receipts, you may want to confirm if your email address is the best for tax receipts. Don't assume because your audience is older; they would prefer paper receipts. The pandemic made everyone a bit more tech-savvy. Ask. Don't assume.
Deceased Donors – in the year of a donor's passing, they still need to file a tax return, so be sure to issue the tax receipt in their name. Any future donations will likely be sent from the estate. If in doubt, do not hesitate to pick up the phone or email. The next of kin or those working on that final tax return would appreciate your proactive approach. A mistake can take longer to resolve. Once again, make a note of whom you spoke to so that future communications can be facilitated.
Have more questions?
For any information regarding tax receipting guidelines, please review the great resources offered by CRA: https://www.canada.ca/en/revenue-agency/services/charities-giving/charities/operating-a-registered-charity/issuing-receipts.html
We have some additional resources regarding tax receipts:
How to issue tax receipts - a guide on tax receipting in Raiser’s Edge
How to parse your tax receipts - a guide on preparing your receipt data file for large volume tax receipts. If you are emailing your tax receipts, you should only send up to 200 email tax receipts at a time. This process does have to be done manually. Learn how to parse your data automatically.
For more information please reach out. We have helped many clients turn this busy season into something much more manageable.
Sentinel Consulting is a consulting firm that focuses on helping non-profits strengthen their operational efficiency. We speak the same language as our clients because we were all fundraisers at some point in our careers.