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:
Whether the sale of XXXXXXXXXX would constitute a gift for income tax purposes.
Position TAKEN:
Not a gift.
Reasons FOR POSITION TAKEN:
The donation would not be without consideration, since the taxpayers would receive a XXXXXXXXXX in exchange for their donation.
September 13, 1994
Charities Division Head Office
John Skelton Rulings Directorate
C. Chouinard
957-8953
7-942331
XXXXXXXXXX - Charitable Donations
This is in response to your facsimile message of September 7, 1994 concerning XXXXXXXXXX query regarding the above-mentioned.
XXXXXXXXXX
Subsections 118.1(2) and (3) of the Income Tax Act (the "Act") permit a deduction from tax payable, within specified limits, for gifts made to Her Majesty in right of Canada, if supported by official receipts issued in accordance with the Regulations. Where the gifts are made by corporations, subsections 110.1(1) and (2) of the Act permit a deduction from income, if official receipts are submitted as proof thereof.
As indicated in paragraph 3 of Interpretation Bulletin IT-110R2, a gift is a voluntary transfer of property without valuable consideration. A gift can be said to have been made where all of the following conditions are satisfied:
(a)property (usually cash) is transferred by a donor to Her Majesty in right of Canada;
(b)the transfer is voluntary; and
(c)no consideration or benefit accrues to the donor or to anyone designated by the donor as a result of the transfer.
In our opinion, the purchase of XXXXXXXXXX would not constitute a gift since the third condition mentioned above would not be satisfied. The first condition would be met as the donation would be made to
XXXXXXXXXX
The second condition would also be met since the decision to buy a XXXXXXXXXX would be considered a voluntary decision, in light of the fact that regular XXXXXXXXXX could be purchased instead. However, the third condition would not be met as the donation would not be without consideration, since the taxpayers would receive a XXXXXXXXXX in exchange for their donation.
Furthermore, according to subsections 118.1(2) and 110.1(2) of the Act, charitable donations must be supported by official receipts. Accordingly, claims for a tax credit under subsection 118.1(3) or a tax deduction under subsection 110.1(1) of the Act would be denied, unless receipts were submitted by the taxpayers.
In order to accept the surcharge on a XXXXXXXXXX as a gift, we would have to consider that a portion of the money contributed is for the XXXXXXXXXX with the balance being a gift. The Department has for many years permitted split receipting in the case of tickets for dinners, balls, concerts and shows (see paragraphs 4 to 8 of Interpretation Bulletin IT-110R2). It has, however, refused to extend this exception to the general rule to anything other than such events. The Department's position in this respect is likely a response to the Aspinall v. M.N.R., 70 D.T.C. 1669 (T.A.B.) case, where the Board held that, in the contribution which Aspinall had made to the charitable organization in question, there was a twofold intention: part of the subscription was made for charitable purposes and the other part was made for entertainment purposes. Presumably, a similar argument could be made by the purchaser of a XXXXXXXXXX. The only aspect of XXXXXXXXXX proposal that distinguishes it from the Aspinall case is the lack of a fund-raising purpose. In Aspinall, as well as in the circumstances described in the above-mentioned Interpretation Bulletin, the tickets were being sold for fund-raising purposes. Since XXXXXXXXXX will donate the money collected to certain registered charities, it would not be considered to be selling XXXXXXXXXX for its own fund-raising purposes. In fact, it appears that XXXXXXXXXX motivation is altruism. Whether split receipting should be allowed under those circumstances is a question of policy on which we do not express an opinion.
M. Brake
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1994
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1994
Email this Content