Non-profit organizations often receive sponsorships from businesses to fund their activities. In return, the non-profit organization may provide promotional services to the sponsor or may allow the sponsor the right to use its logo, trade name, or any similar intellectual property.
An organization prints conference tote bags for delegates with the name of the company that sponsors them. The payments from the company are not considered payment for a good or service; therefore, they are not subject to the GST/HST.
You receive funding in return for allowing a corporation the right to use your organization's logo. The corporation uses your logo in its advertising campaign. The payments from the corporation are not considered payment for a good or service; therefore, they are not subject to the GST/HST.
In such cases, the CRA does not consider the amount received by the non-profit organization as a payment for goods or services. Sponsorship is therefore deemed not to be a payment for a supply. The GST and the PST therefore do not apply to this transaction.
If, however, the payment by the sponsor is made primarily (more than 50%) for advertising on television or radio, or in a newspaper, magazine, or other publication issued periodically, the payment received is not payment for a sponsorship but rather for advertising services. Therefore, the payment is subject to the GST/HST.
A radio station, which is a non-profit organization, received $1,000 from a sponsoring company. In recognition of the funds received, the organization will broadcast a 30-second advertisement for the company in question. This ad will run three times a day for the next four weeks. Such an advertising service is normally sold for $600. The cost of advertising represents 60% of the amount paid by the sponsor. Since the amount paid is for more than 50% of a radio advertising service, the GST and the QST apply to the entire $1,000 received under the sponsorship