CRA discusses the potential credit for gifts by will to a US charity

Will a bequest made by will to a U.S. organization qualify for a charitable donation credit on the individual’s final return? CRA summarized the rules under s. 118.1(5.1)(b) and para. (c) of the charitable gift–definition generally permitting a graduated rate estate (GRE) of the individual to carry back the gift amount (for the donation to a charity of property received by it on the individual’s death) to the terminal return of the individual.

CRA went on to discuss the gift limit in para. (a) of the definition of “total gifts” in ss. 118.1(1) and the limited relief provided for gifts to US organizations under Art. XXI(7) of the Canada-U.S. Convention. In particular, it noted that the amount of relief available in this regard is restricted to the income of the resident for that year from U.S. sources, except where the gift is to a college or university at which the resident or a member of the resident's family is or was enrolled. CRA also states that it “accepts that any organization that is exempt under section 501(c)(3) of the U.S. Internal Revenue Code will qualify for the purposes of paragraph 7 of Article XXI of the Treaty.”

Neal Armstrong. Summary of 25 August 2021 External T.I. 2020-0866131E5 under s. 118.1(1) – charitable gift – para. (c) and Treaties - Art. 21.