CRA denies that there is a technical glitch in the “total charitable gifts” definition
As a result of the death of the beneficiary of a (life-interest) trust described in s. 104(4)(a)(ii.1), the trust’s taxation year ended on the day of death (the “Death-Date Year”) and a new taxation commenced immediately thereafter (the “Post-Death Year”). A life-interest trust (described in s. 104(4)(a)(ii.1)) made a gift of non-depreciable capital property in the taxation year commencing immediately after the beneficiary’s death (the “Post-Death Year”) and prior to the trust’s filing-due date for the taxation year ending with that death (the “Death-Date Year”).
When asked about this, CRA did not seem to be troubled that, although (c)(ii)(C) of “total charitable gifts” in s. 118.1(1) contemplates that a gift made by the trust in the Post-Death Year could be included in the total charitable gifts of the trust in the Death-Date Year, variable B of s. (a)(iii) of “total gifts” in s. 118.1(1) (calculating the numerical maximum for recognized gifts) refers only to the proportion of an individual’s taxable capital gain for a taxation year in respect of a gift made by the individual in the taxation year (e.g., the Death-Date Year). Thus, the trust’s “total gifts” for the Death-Date Year could include the eligible amount of the gift of capital property made in the Post-Death Year.
Neal Armstrong. Summary of 27 January 2020 External T.I. 2019-0799641E5 under s. 118.1(1) - “total gifts” - (a)(iii) – B.