The US rule: only the amount over the value
IRS Publication 526 says that when you pay more than fair market value for goods or services, only the excess may be a contribution, and you must have meant it as one. The IRS charity auctions page adds that a catalog of good faith value estimates lets a buyer show they knew the item was worth less. Publication 1771 (Rev. 11-2023) sets two duties for the charity:
- A payment over $75 that is partly a contribution needs a written statement: the deductible amount is limited to the excess over the value of what the buyer received, plus a good faith estimate of that value. Missing it can cost $10 per contribution, up to $5,000 per event.
- A single contribution of $250 or more needs a written acknowledgment from the charity before the donor can deduct it.
Example from Publication 1771: $100 for a concert ticket worth $40. The deduction may not exceed $60, and the statement is still required because the payment is over $75.
The Canadian rule: post the value, then the 80% test
The CRA page Fundraising events: issuing receipts says the item's fair market value must be made known to all bidders before the auction, and the value cannot exceed 80% of the winning bid. The receipt is for the bid minus the value. To find the lowest bid that qualifies, multiply the value by 125%. In the CRA's example a bike worth $400 sells for $550: the receipt is $150, and the minimum bid was $500.
The receipt itself must carry the items on the CRA's sample official donation receipts page, including the amount of the gift, the value and description of the advantage, the eligible amount, the registration number, a unique serial number and the CRA's name and website. The checkout desk prints these for every buyer once they have paid.
Questions about auction receipts
Can a charity give a tax receipt for a silent auction purchase in Canada?
Yes, if the item's fair market value was made known to all bidders before the auction and that value is no more than 80% of the winning bid. The receipt is for the bid minus the value. Otherwise no receipt can be issued to the winning bidder.
What must a US charity tell a silent auction winner?
If the payment is over $75 and partly a contribution, IRS Publication 1771 calls for a written statement that only the amount paid over the value of what was received is deductible, with a good faith estimate of that value. A contribution of $250 or more also needs a written acknowledgment.
What if the winning bid is less than the item's value?
Then no part of the payment is a contribution. IRS Publication 526 gives the example of a beach-house week bought at a church auction for its rental value: no deduction. In Canada the bid fails the 80% test, so no receipt.
Can the person who donated an auction item get a receipt?
In Canada the CRA allows a receipt for the item's fair market value when donated, but not for a service, or for a gift card from the business that issued it. In the US the charity's acknowledgment describes the item but does not state its value.
We forgot to post the values before bidding. What now?
In Canada the CRA says no receipt can then be issued to the winning bidders. In the US, Publication 1771 lets the charity's disclosure come with the payment, so the buyer's letter can carry the good faith estimate. But the IRS charity auctions page says a buyer can deduct only if they knew the item was worth less than they paid.
Does the 80% rule apply to live auctions and paddle raises?
The CRA treats silent and live auctions the same. A paddle raise or fund-a-need pledge gives nothing back, so the whole amount is the gift in both countries.
This page shows what the IRS and CRA guidance says, as read on October 22, 2026. It is not tax advice; check with your accountant for your own event.