7 October 2016 APFF Roundtable Q. 6, 2016-0652821C6 F - Graduated Rate Estate - Total Charitable Gifts -- translation

Translation disclaimer

This translation was prepared by Tax Interpretations Inc. The CRA did not issue this document in the language in which it now appears, and is not responsible for any errors in its translation that might impact a reader’s understanding of it or the position(s) taken therein. See also the general Disclaimer below.

Principal Issues: Does clause (c)(ii)(A) of the definition of "total charitable gifts" in subsection 118.1(1) apply to a graduated rate estate ("GRE")?

Position: Yes

Reasons: A GRE or a former GRE is a trust

7 October 2016 APFF Roundtable

Question 6

Level of donations made: can they be reported in the future

Where a donation is made by a graduated rate estate ("GRE") of an individual and certain conditions are met, the definition of "total charitable gifts" in subsection 118.1(1) allows the use of the donation in several ways:

  • Clause (c)(i)(C) allows the gift to be used in the return for the particular taxation year of the individual's death or the preceding taxation year;
  • Clause (c)(ii)(B) allows the gift to be used in the return of the GRE in the year the gift is made, and in a preceding year.

At the announcement of this measure in 2014, the budget documents referred to this use in the year of donation and in earlier years but remained silent as to the possibility of reporting the gift in subsequent years. According to our reading of clause (c)(ii)(A) of the definition of total charitable gifts in subsection 118.1(1), the GRE (which is a trust for the purposes of this clause) can use the gift in the five years following the donation.

Question to CRA

Does the CRA agree with our interpretation?

CRA response

The CRA agrees with your interpretation. Clause (c)(ii)(A) of the definition of "total charitable gifts" in subsection 118.1(1) applies to the GRE. This has the consequence that the eligible amount of a gift can be included in the calculation of total charitable gifts of a GRE or a former GRE for the taxation year in which the donation is made or in the five taxation years following the donation.

For details on this subject, please see “Estate Donations - Deaths after 2015", Questions / Answers (footnote 1) and "Estate Donations by Former Graduated Rate Estates", Questions / Answers (footnote 2), that are available on the website of the CRA.

Catherine Ayotte
(613) 670-8897
October 7, 2016
2016-065282

FOOTNOTES

Due to our system requirements, footnotes contained in the original document are reproduced below:

1 http://www.cra-arc.gc.ca/gncy/bdgt/2014/qa14-eng.html
2 http://www.cra-arc.gc.ca/gncy/bdgt/2016/qa09-eng.html

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, 2016

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, 2016