Calgary Mayor Naheed Nenshi says he's not surprised tax receipts are being issued to people donating money to help him repay the city for his legal costs.

Nenshi was sued for defamation by homebuilder Cal Wenzel in 2013 for remarks made by the mayor during an election campaign.

The lawsuit was settled out of court in 2015.

The city paid Nenshi's $300,000 legal bill, but council voted to amend its Indemnification of Members of City Council policy, which required Nenshi to donate the equivalent amount to the city.  

Nenshi was permitted to repay the money through fundraising.

"The [indemnification] policy is right and it needs to be in place and many politicians have benefited from it," Nenshi said. "But I also thought if there's an ability to pay the city back, we should."

A volunteer committee led by businessman Dean Koeller has so far raised $207,000, which is given straight to the city. Donors are given charitable tax receipts by the city as the money is being used to support municipal programs and services.

'People give money to the city all the time'

"This is a federal and provincial tax receipt, not a city tax receipt, to be clear," Nenshi said. "People give money to the city all the time.

"Donations to the city get [tax receipts] and it's up to the donor on whether or not they want to use them."

Nenshi is not permitted to take part in the fundraising campaign. The names of donors who give more than $100 will be released publicly when the full amount is repaid.

In a release provided Friday, the city further clarified why the tax receipts were being issued.

"As a registered municipality, The City is entitled to receive donations and issue official donation receipts. All donations are being deposited into The City's general revenue account," the release read.

With files from Scott Dippel