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: Whether subsection 118.1(5) would apply to a bequest that is subject to various conditions.
Position: Factual determination.
Reasons: In previous files, we concluded that the fact that there are conditions attached to a gift does not, in itself, negate the gift. Our general view is that the donation would qualify as a gift if the donor is freely parting with the funds or property, receives no benefit, other than recognition, in return and the funds or property can never revert to the donor or any related person.
XXXXXXXXXX 2001-006996
March 19, 2001
Dear XXXXXXXXXX:
Re: Gift by Will
This is in reply to your letter dated January 4, 2001 requesting our views with respect to the application of subsection 118.1(5) of the Income Tax Act (the "Act") to a specific bequest to be made to a registered charity.
As discussed (Leigh/XXXXXXXXXX), while we are unable to comment on the specific bequest described in your letter, we can offer the following general comments which are not binding on the Agency.
In the type of situation with which you are concerned, an individual enters into a written agreement with a registered charity whereby the individual agrees to direct in his will that his executors make a gift of a specific amount to the charity. The bequest may be satisfied in cash, shares or a combination thereof. The charity, in turn, agrees to use the bequest to fund the expansion of one of its buildings. Pursuant to the written agreement, the charity also agrees to rename the building in recognition of the bequest by the individual for a specified period.
Where an individual's will stipulates that a specific amount is to be gifted to a qualified donee and provides discretion to the executor to make the gift in cash or in specie, it is our view that the gift would generally qualify as a gift by will for the purposes of subsection 118.1(5) of the Act. Pursuant to subsection 118.1(5) of the Act, the gift is deemed to have been made by the individual immediately before the individual died for the purposes of section 118.1 of the Act.
We note that the fact that there are conditions attached to a gift does not, in and of itself, necessarily preclude the transfer of property from qualifying as a gift. While it is a factual determination as to whether a gift has been made in a particular situation, it is our general view that a donation would qualify as a gift for income tax purposes if the donor is freely parting with the funds or property, receives no benefit, other than recognition, in return and the funds or property can never revert to the donor or any related person.
We hope that our comments will be of assistance to you.
Yours truly,
Manager
Financial Institutions Team
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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, 2001
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, 2001
Email this Content