Tax Receipt for Donating a Car in Canada: Know How Much You Can Claim

Tax Receipt for Donating a Car in Canada: Know How Much You Can Claim
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Resources Jun 10, 2024 3 min read
Tax Receipt for Donating a Car in Canada: Know How Much You Can Claim

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The absolute minimum tax receipt you can receive in Canada for donating your car is $500.

Even if the charity sells your car for less or its fair market value is lower, you will still receive a tax receipt for $500. 

This makes it beneficial if you have a car that is no longer worth $500.

Considering that it might be difficult to sell that vehicle anyway, donating it and receiving more than its value is a win-win situation. 

If the value of your vehicle is more than $500, the charity will likely require you to get your vehicle appraised.

This will help determine the actual fair market value for the vehicle that you are donating. 

Can You Always Get a Tax Receipt for Donating a Car in Canada?

Yes, anytime you donate your car to a charity in Canada you will receive a tax receipt for your donation.

Although the first instinct from many Canadians is to sell your used car for cash, if it’s only worth a few hundred dollars, donating it to a charity allows you to lower your taxable income.

This can potentially reduce the amount of income tax you are required to pay for that year. 

A tax receipt for donating a car in Canada works just like donating cash.

The only difference is that the amount of your tax receipt is determined by the fair market value of the car and not the amount of cash you donate. 

How is the Value of the Tax Receipt Calculated?

Most newer vehicles will need to be appraised by an official appraiser so that the charity is aware of the fair market value of the car.

If it is an older car or not likely to get a fair market value of at least $500, the tax receipt will be for $500. 

The value of your tax receipt can also vary from Province to Province and even from city to city.

It could depend on certain taxes or even the supply of that vehicle.

Most charities will auction donated vehicles off, so the demand for that vehicle in your region could also impact how much you receive. 

Eligibility Criteria for Receiving a Tax Receipt for Donating a Car in Canada

Some eligibility criteria must be met to receive a tax receipt for the vehicle you donate in Canada.

Some of the rules can vary depending on the charity you donate your car to.

Here are some of the eligibility criteria to consider before donating your car in Canada:

  • The vehicle must start, run, and be drivable
  • The vehicle should have Provincially-issued license plates and registration
  • The vehicle should not have any outstanding loans or liens against it
  • The vehicle should have ownership documents so you can prove that it belongs to you or your family
  • The vehicle should not be unsafe to drive or have any major damage to it
  • The vehicle should be registered to you or a family member.

Note that even if all of these criteria are met, it is ultimately up to the charity to issue a tax receipt for your vehicle.

Please contact your charity of choice if you are unsure about any of these criteria before starting the process of donating your vehicle.

Frequently Asked Questions

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How Much Will I Receive on My Tax Receipt for Donating My Car in Canada?

In Canada, you will receive a minimum tax receipt of $500 for donating your car to a charity. Even if your vehicle is worth less, you will receive a tax receipt for the $500 minimum. Note that there will be criteria your vehicle needs to meet to be accepted as a donation. This may mean getting your car appraised for its fair market value.

How Do I Obtain a Tax Receipt for My Donated Car in Canada?

The first thing you need to do is check that your vehicle meets the eligibility requirements of both the CRA and the charity. After that, you will need to arrange with the charity for the pick-up or drop-off of your vehicle. Once this is complete, the charity will issue you your tax receipt for the value of your donated car.

Which Charity is the Best to Donate a Car to in Canada?

There are plenty of charities that will accept used cars in Canada. Some notable charities are Kars4Kids, Car Heaven, Ronald McDonald House, and the Salvation Army.

Contributors

Baggio Ma
AUTHOR

Baggio Ma

Baggio has been investing for nearly a decade, using the perspectives gained from his work experience in the private, public, and non-profit sectors to shape his investment outlook. He has a specific interest in the potential of emerging disruptive technologies and their impact on the future.

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