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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues:
Does the reduced inclusion rate under subparagraph 38(a.1)(ii) apply to a gift made to a private foundation?
Position: No.
Reasons:
Wording of the Act. The gift has to be made to a qualified donee other than a private foundation.
XXXXXXXXXX 2002-015343
A. St-Amour, CA
August 16, 2002
Dear XXXXXXXXXX:
Re: Gifts of shares - Interpretation of subparagraph 38(a.1)(ii)
This is in reply to your letter of July 16, 2002, requesting our interpretation of paragraph 38(a.1)(ii) of the Income Tax Act (the "Act"). More precisely, you asked if a gift subject to subparagraph 38(a.1)(ii) of the Act can be made to a private foundation.
Subparagraph 38(a.1)(ii) of the Act provides a reduced inclusion rate in respect of the capital gain arising on the deemed disposition of a property on the death of an individual where the property is the subject of a gift under the individual's will and is described in subparagraph 38(a.1)(i) of the Act. For paragraph 38(a.1)(i) of the Act to apply, the shares must be listed on a prescribed stock exchange and be gifted to a qualified donee other than a private foundation. Therefore, we are of the view that a gift to a private foundation under a will is ineligible for the special relief under subparagraph 38(a.1)(ii).
As indicated in paragraph 22 of Information Circular 70-6R5 dated May 17, 2002, the above comments do not constitute an advance income tax ruling and are not binding on the Agency. We trust the above comments will be of assistance to you. If you have any other questions, do not hesitate to contact us.
Yours truly,
Manager
Section du financement et des régimes
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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