Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
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: Follow-up to 2000-001680
Position:
Reasons:
XXXXXXXXXX 2000-002628
July 18, 2000
Dear Sirs:
Re: Certifigift - Charitable Tax Certificate Proposal
This is in reply to your letter dated of May 10, 2000 and further to our letters dated February 23 and April 10, 2000.
A person acquiring a certifigift is entitled to present same to a designated retailer to reduce the cash price of goods. In addition the holder of a certifigift is entitled to direct the organization that sold it to pay the purchase price to a designated charity. After the certifigift is presented to the retailer all that remains is the right to direct funds to the charity. This is the basis for our view that the certifigift in the hands of the retailer would not have the same value as it had in the hands of the person that initially purchased it. In our previous letter we referred to the certifigift in the hands of the retailer as "used" because the certifigift does not provide the retailer with the right to purchase goods at a reduced cash price.
In valuing the certifigift in the hands of the retailer and consequently the amount of the donation that could be considered to be made to the charity by the retailer we indicated that the value of the property should be determined without reference to the tax system as would be the case for any other property. For example if a share with a trading value of $100 is donated to a charity the value would not be increased because the donor will receive a donation receipt.
As previously noted the retailer is not entitled to a charitable receipt for the amount of the money transferred to the charity by the seller of the certifigift because the money transferred to the charity is not property of the retailer. The situation would be different if the retailer is entitled to redeem the certifigift for the original selling price; is free to do with the money as the retailer pleases; and chooses to, but is under no obligation to, donate all or part of the money to a charity.
We hope our comments are of assistance in making our position clear with regard to your proposal.
Yours truly,
F. Lee Workman
Manager
Financial Institutions Section
Financial Industries Division
Income Tax Rulings Directorate
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