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.
Principal Issues: Whether donation of a right to use a vacation property (cottage) for a limited time is a gift in kind. Whether this is a "transfer of property".
Position: No
Reasons: A right to use property is a property. However, the granting of such a right is not a transfer of property, per Dunkelman v. M.N.R., 59 DTC 1242, which held that a loan of money is not a transfer of property. Also, the legislation on attribution rules includes not only transferred property but also "lent property". If all rights to use property resulted in a transfer there would be no need in section74.1 for "lent property". XXXXXXXXXX . And at Civil law, a gratuitous loan of property is not considered a gift; it is a loan for use as defined by article 2313 of the Quebec Civil Code.
XXXXXXXXXX 2008-026772
J. Haalboom
November 12, 2008
Dear XXXXXXXXXX :
Re: Can a Charitable Receipt be issued for the Donation of a Vacation Property
This is in reply to your letter of February 4, 2008 requesting our view on whether a donation of a vacation property to a registered charity for occasional limited-time use would qualify as a charitable gift under section 118.1 of the Income Tax Act.
Our Comments
The particular situation outlined in your letter appears to relate to you personally. As set out in federal Information Circular 70-6R5, this Directorate will comment on proposed transactions involving specific taxpayers only in the form of an advance income tax ruling. Should your situation involve a completed transaction of yours, you should submit all the relevant facts and documentation to the appropriate Tax Services Office for their views. We are prepared, however, to provide the following general comments.
On the assumption that your vacation property is a cottage, it is our position that the gratuitous loan of property including money is not a gift for purposes of sections 110.1 and 118.1 of the Income Tax Act since such a loan does not constitute a transfer of property. Our position was conveyed to the public in the publication Income Tax Technical News, No. 17, dated April 26, 1999.
Income Tax Technical News, No. 17, also states that there is nothing to prevent a charity from paying rent or interest on a loan of property and later accepting the return of all or a portion of the payment as a gift, provided it is returned voluntarily. There must be two separate transactions which are independent of each other. We also note that in such an arrangement the individual would have to report in his or her income for income tax purposes the rent or interest charged to the charity.
We trust that the above comments are of assistance.
Yours truly,
Nerill Thomas-Wilkinson
Acting Manager
for Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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