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At this time of year, many charities ask for donations that can be provided to needy families in the form of Christmas hampers. Other charities are preparing to serve holiday meals to the poor and homeless. Many offices and apartment buildings encourage people to put food bank donations under a Christmas tree. What these charities and donors may not realize is that most Canadian provinces have passed special laws to encourage food donations. Some of these laws provide food donors with protection from lawsuits, while others offer special tax incentives for farmers who donate food.
Food donor protection laws – Protection for donors and distributors
Sometimes charities and donors worry about the risk that something may go wrong with donated food or that distributing food creates liability risks. Charities that receive donations of food approaching its “best before” date may be reluctant to pass it on to food banks or to put it into food hampers, fearing that to do so is unlawful or risky. In both cases, the law offers significant protection against legal risk.
Food donor protection laws were passed in many North American jurisdictions in the late 1990s. They were intended to reduce food waste and to encourage support for food banks. In British Columbia, the Food Donor Encouragement Act, SBC 1997, c 8 (“FDEA”) protects those distributing food in good faith from liability for damages, injury or death caused by the donated food. It also protects directors, agents, and volunteers of a corporation that donates or distributes food. Other provinces have similar laws.
The FDEA provides protection unless: (a) the food was adulterated, rotten, or otherwise unfit for consumption; and (b) the person donating or distributing the food intended injury or death or acted in reckless disregard for safety of others. Any charity or donor that takes reasonable care not to distribute rotten food will be protected. This means that donors and charities have a much higher degree of protection from liability than do ordinary food sellers.
An expired “best before” date does not automatically mean that food is unsafe to eat, nor does it make it illegal to sell or distribute that food. The best-before date indicates that if the product has been properly stored, it should be of high quality until the specified date. That is not the same as an expiration date, which is only used for foods (such as infant formula or meal replacements) that are required to have a particular nutritional composition that may deteriorate with time. Neither type of label has to do with food safety.
Food donation tax credits for farmers
Canadians who donate food to a charity may be able to receive a donation tax credit for the retail value of the items, although few of those who make such in-kind donations seek a tax receipt. And they cannot receive a tax receipt for donations they make directly to needy families or to organizations that are not registered charities.
Food donations by farmers are treated differently. Four provinces (Ontario, Quebec, British Columbia and Nova Scotia) provide tax credits for farmers who donate to food banks or community food programs. Typically, these programs provide farmers with a non-refundable tax credit of 25% (or more) of the wholesale value of the donated product. Food Banks Canada[1] points out that this means every dollar of tax revenue foregone will result in seven dollars’ worth of food going to food banks.
One limitation of these programs is that they typically only provide a credit to the producer of the food. Restaurants, retailers and wholesalers, for example, cannot claim these credits. A food donation tax credit program in the USA was expanded in 2015 to apply to donations by all types of businesses, provided they donate food to a charity that uses it for the care of the ill, needy, or infants.
In 2012, Food Banks Canada issued a report[2] recommending creation of a tax incentive similar to that in the USA, to stimulate charitable food donations to food banks. The proposal would allow food manufacturers, importers, distributors and retailers to deduct from taxable income the production cost of food donated to food banks, plus one half of the unrealized appreciation (with a maximum deduction of twice the production cost). The National Zero Waste Council has also advocated a tax incentive for food donations to food banks.
Miller Thomson lawyers have experience advising charities and not-for-profits on all areas of law; the firm also acts for numerous clients in the food and agriculture sector. Contact Miller Thomson for advice and assistance in any of these areas.
[1] Food Banks Canada, “Fresh Food Tax Credit: An Agricultural Tax Credit for Fresh Food Donations” (September 2016), online (pdf): Food Banks Canada <www.foodbankscanada.ca/getmedia/cee1bcc2-2353-4ffd-95c5-5aeffe50b955/Fresh-Food-Tax-Credit_Food-Banks-Canada_Aug2016.pdf.aspx?ext=.pdf>.
[2] Food Banks Canada, “Stimulating Canada’s Charitable Sector: A Tax Incentive Plan for Charitable Food Donations” (January 2012), online (pdf): Food Banks Canada <www.foodbankscanada.ca/getmedia/934d7935-4f3a-4785-9e4c-48099f44b574/A-Tax-Incentive-Plan-for-Charitable-Food-Donations_2012.pdf.aspx?ext=.pdf>.
