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 or not certain dispositions of property to a registered charity for some consideration can result in a gift.
Position:
No. Except for certain fund raising events set out in paragraph 5 of IT-110R3
Reasons:
A gift is defined as a voluntary transfer of property without valuable consideration. As previously determined, the assumption of a mortgage by the recipient of the property is consideration
Mr. Robert Dubrule
Department of Finance
L'Esplanade Laurier 971446
140 O'Connor Street J.E. Grisé
16th Floor (613)957-2059
Ottawa, Ontario
K1A 0G5
November 3, 1997
Dear Mr. Dubrule:
Re: Gifts
This is in reply to your fax of May 30, 1997 to Mr. Gordon Murray, concerning questions on the transfer of property to a registered charity raised by your correspondent XXXXXXXXXX.
In general terms, a gift, for purposes of sections 110.1 and 118.1 and proposed paragraph 38(a.1) of the Income Tax Act, is a voluntary transfer of property without valuable consideration. The proceeds from the sale of shares for an amount equal to the shares' adjusted cost base in your first situation would constitute valuable consideration. Similarly, the assumption of a mortgage by a registered charity in your second situation constitutes valuable consideration, being a benefit to the donor to the extent that the donor is relieved of the responsibility for the debt. Accordingly, it is our general view that the transfers outlined in your correspondent's situations would likely not be considered gifts. Proposed paragraph 38(a.1) of the Act would not apply to the sale of the shares to only include 37.5% of the taxpayer's capital gain as the taxpayer's taxable capital gain.
For many years the Department, in recognition of certain widely accepted fund raising practices, has permitted the difference between the purchase price of a ticket to attend a "dinner, ball, concert or show" and the fair market value of the food, entertainment etc., available to a ticket purchaser, to be considered a gift. As indicated in paragraph 5 of Interpretation Bulletin IT-110R3, Gifts and Official Donation Receipts, this exception to the general rule will not be extended to anything that is not a dinner, ball, concert, show or like event.
Yours truly,
John F. Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
