15 February 2000 External T.I. 1999-0006625 - GIFTS BY WILL

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: An individual has made a will that provides for a gift of a portion of the residue to unnamed recipients in furtherance of charitable objectives. There is absolute discretion in the Trustees whether to make the gift, and to whom. The testator is now incapacitated and cannot change her will. The testatator's advisors have established a private foundation and seek an opinion whether that provides sufficient certainty as to the identity of the recipient of the gift to enable a tax credit to be claimed in the year of death under subsection 118.1(5).

Position: The situation described would not constitute a gift by will for the purposes of subsection 118.1(5).

Reasons: Where a trustee, under the direction of the will, has discretion as to whether a gift be made, to whom a gift is to be made, or the amount of a gift to be made, it is our general view that subsection 118.1(5) would not apply. The will described provides discretion to the trustee as to whether the gift be made, and to whom.

XXXXXXXXXX 1999-000662

Attention: XXXXXXXXXX

February 15, 2000

Dear Sirs:

Re: Subsection 118.1(5) - Gift by Will

This is in response to your letter of November 16, 1999 in which you request our views as to whether a proposed gift to be made pursuant to the terms of a will would qualify for a tax credit in the year of the testator's death, pursuant to subsection 118.1(5) of the Income Tax Act.

We are unable to consider transactions involving specific taxpayers in a general letter of opinion. As the subject of your request appears to contemplate a proposed transaction involving specific taxpayers, you may request an advance income tax ruling in accordance with the guidelines set out in Information Circular 70-6R3.

We can, however, provide you with the following general comments.

Subsection 118.1(5) of the Act applies to deem a gift made by an individual's will to have been made by the individual immediately prior to his or her death. Generally, for a gift to be regarded as having been made by an individual's will, the terms of the will must identify the intended recipient of the gift and the amount of the gift. Where a trustee, under the direction of a will, has discretion as to whether a gift be made, to whom a gift is to be made, or the amount of a gift to be made, it is our view that subsection 118.1(5) would not apply.

Although the foregoing comments are not binding on the Canada Customs and Revenue Agency, we trust they assist.

Yours truly,

F. Lee Workman
Manager
Financial Institutions Section
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch