CRA finds that a transfer of marketable securities to a charity was a gift by will notwithstanding complicated post-mortem mechanics

As disclosed in a heavily redacted and confusing description, a testator bequeathed half the residue of his estate to a charitable foundation. The executors apparently satisfied this bequest, in part, by having an investment holding company issue notes to them in satisfaction of dividends, and gifted the notes to the foundation, with the notes being paid off with a transfer of marketable securities by the holding company to the foundation.

In finding that the testator was thereby deemed by s. 118.1(5) to have made a gift in his terminal year, CRA first noted that even though the gifted notes were non-qualifying securities, ss. 118.1(13)(c) and (15) deemed there to be a gift at the time of death when the notes were paid off. Furthermore, discretion of the executors as to how to effect the bequest did not detract from their obligation to make it.

Neal Armstrong. Summary of 2 January 2014 Memo 2013-0490141I7 under s. 118.1(5).