Charities are occasionally offered the opportunity to use the property of another person free of charge. This may include the provision of rent-free office or parking space, or the use of physical resources such as cars or equipment. In some cases, such individuals will request that instead of the charity paying them for the use of the rented or loaned property, the charity should simply issue a receipt for the amount of the rent foregone. In such circumstances, it is important that charities and their supporters understand the rules under the Income Tax Act and CRA policy.

The Income Tax Act provides that only gifts of property can be receipted. For this reason, donations of services or loans of property to a charity do not qualify as gifts because they do not transfer a property interest to the charity. They simply allow the charity to use the property of the donor, or to benefit from the donor's services, free of charge. It follows from this that providing rent-free accommodation is also not eligible for a receipt, because it does not involve a gift of property.

Because it is not possible for a charity to issue a receipt directly for the value of the rent foregone by the donor, there are two ways the charity can proceed where it receives rent-free accommodation or a rent-free lease of property and the provider of the rent-free accommodation wants to receive a receipt:

  • The charity and the donor can conduct a “cheque exchange”, in which the charity pays for the rental of the property and the landlord donates the payments back. It would be crucial to be able to show documentation of two separate transactions: the rent payment by the charity for the lease, and the subsequent voluntary donation of some or all of this rent back to the charity.


  • The landlord/donor can forgive the rental debt owned by the charity. In this case, there would need to be documentation of the lease establishing the rental obligation of the charity as tenant, as well as documentation of the forgiveness of the debt by the landlord.

It should be noted that in both cases, the landlord would need to include the rental amount in income. Thus, there would be no tax advantage to the landlord by picking one approach over the other.

CRA has commented that the assignment of a lease to a charity by the holder of a leasehold interest may qualify as a gift of property for which a receipt can be issued. However, this must be distinguished from the circumstance where the owner of the property provides a lease rent-free. The latter situation can only be dealt with through one of the approaches described above.