How Can a University Outside Canada Become a Qualified Donee?

Becoming a registered charity is an important way for a not-for-profit organization to raise funds and serve its mission. A registered charity can receive gifts from other registered charities and can also make gifts to other registered charities. Canadian donors can give to registered charities and receive a donation receipt, but donors can also give to a wider group of organizations called “qualified donees”.

This blog will explain about qualified donees and will focus on the process for a foreign university to become a qualified donee.

What is a Qualified Donee?

A qualified donee can issue official donation receipts for gifts that they receive from donors. The Income Tax Act (Canada) also allows registered charities to make gifts to them without the need to enter into an agreement of any sort. The registered charity that makes a gift to the qualified donee does not have to maintain direction and control over the activities of the qualified done.

Who is a Qualified Donee?

In addition to registered charities and registered national arts service organizations, qualified donees include:

Benefits of Official Donation Receipts

Registered universities outside Canada are qualified donees and so they can issue official donation receipts and are eligible to receive gifts from registered Canadian charities. An official donation receipt allows donors with taxable income in Canada to claim a credit on their Canadian income tax and benefit return or a deduction on their Canadian corporation income tax return. Qualified donees are also the only entities that Canadian registered charities are allowed to make gifts to. A registered charity cannot make a gift to a not-for-profit that is not a qualified donee.

Publication of Status as a Registered University

A university outside Canada that is registered as a qualified donee will have its name, location, and registration status included on the CRA’s publicly available list of qualified donees. Publication of the university and its status can be an important tool for donors to know whether they can donate to their favorite university outside of Canada. Getting listed on this list is highly desirable for any foreign university. To see the list of registered universities outside of Canada that are qualified donees, go to the following site: canada.ca/charities-giving, and select “Other organizations that can issue donation receipts”, then select “Registered universities outside Canada” and see “list of registered universities outside Canada.”

Registration Criteria

To be eligible for qualified donee status as a university outside Canada, a foreign educational institution must do all of the following:

maintain an academic entrance requirement of at least secondary school matriculation standing
be organized for teaching, study, and research in the higher branches of learning
ordinarily include Canadian students in its student body
have the authority to grant degrees of at least the baccalaureate level (bachelor or equivalent) according to the academic standards and statutory definitions of the country the institution is located in.

Application Process

To apply for qualified donee status as a university outside Canada, an application letter is sent to the CRA’s Charities Directorate. The letter should state that the institution is asking for qualified donee status and must include information and supporting documents required by the CRA. Mills & Mills LLP has acted as an authorized representative to successfully to obtain Registered University Qualified Donee Status.

Official Donation Receipts

Once a university outside Canada is registered as a qualified donee, it can issue official donation receipts for income tax purposes for gifts received. The information on an official donation receipt for cash gifts must be legible and shown in a way that cannot be easily altered and have the following:

a statement that it is an official receipt for income tax purposes
the name and address of the qualified donee
a unique serial number
the location where the receipt was issued (city, town, municipality)
the date the gift was received
the date the receipt was issued
the full name, including middle initial, and address of the donor
the amount of the gift
the amount and description of any advantage received by the donor
the eligible amount of the gift
the signature of an individual authorized by the qualified donee to acknowledge gifts
the name and website address of the CRA

Receipts for non-cash gifts must also include:

a brief description of the gift received by the qualified donee
the name and address of the appraiser (if the gift was appraised)

The amount of a non-cash gift must be its fair market value at the time the gift was made.

Maintaining Qualified Donee Status

To keep its qualified donee status, a registered university outside Canada must meet certain requirements under the Act. These include making sure it issues official donation receipts properly and keeping books and records supporting any official donation receipts it issues.

Books and Records

Adequate books and records will contain:

information to allow the CRA to verify revenues for which donors can claim tax credits or deductions
information to allow the CRA to confirm that they meet the requirements for qualified donee status under the Income Tax Act
a duplicate of each receipt containing prescribed information for each donation received

Registered universities may keep their books and records in their own country, but must make them available in Canada at the CRA’s request.

Books and records include but are not limited to:

financial statements supporting any donation receipts that are issued
source documents such as cancelled cheques and bank deposit slips

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Author

Taras Kulish

Taras brings over 30 years experience to the Business Law Group at Mills & Mills LLP. Before joining the firm in 2020, Taras was for many years the chair of the Charity/Not-for-Profit and Intellectual Property groups at a well known mid-sized firm in Toronto.