4 June 2002 Internal T.I. 2002-0142187 - PRESCRIBED PRIZE; CARNEGIE

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 Carnegie Hero Fund Prize is a prescribed prize

Position: yes

Reasons:    fits criteria in Reg 7700,
		June 4, 2002

	International Tax Services Office	HEADQUARTERS
	2204 Walkley Road	Denise Dalphy, LL.B.
	Ottawa	(613) 941-1722

	Attention: Mr Bruno Hrehoruk
		2002-014218

Carnegie Hero Fund Commission Prize

We are writing in reply to your memorandum dated April 8, 2002 to Laurie Watters, which was forwarded to us on May 22, 2002 wherein you enquired whether the above-referenced award is a "prescribed prize" for the purposes of subparagraph 56(1)(n)(i) of the Income Tax Act (the "Act") and section 7700 of the Income Tax Regulations (the "Regulations").

The following information about the prize is on the website "www.carnegiehero.org".

1. "The CARNEGIE HERO FUND COMMISSION was established in 1904 by industrialist and philanthropist Andrew Carnegie:

- To recognize acts of outstanding civilian heroism throughout the United States and Canada, and

- To provide financial assistance to the awardees and the dependents of those awardees who are killed or disabled by their heroic actions."

2. "A civilian who voluntarily risks his or her own life, knowingly, to an extraordinary degree while saving or attempting to save the life of another person is eligible for recognition by the Carnegie Hero Fund Commission."

3. "The act of rescue must be one in which no full measure of responsibility exists between the rescuer and the rescued. Persons not eligible for awards are: Those whose duties in following their regular vocations require them to perform such acts, unless the rescues are clearly beyond the line of duty; and members of the immediate family, except in cases of outstanding heroism where the rescuer loses his or her life or is severely injured. Members of the armed services and children considered by the Commission to be too young to comprehend the risks involved are also ineligible for consideration."

4. "There must be conclusive evidence to support the threat to the victim's life, the risk undertaken by the rescuer, the rescuer's degree of responsibility, and the act's occurrence."

5. "Recognition in all cases considered worthy by the Commission consists of a bronze medal (above), a financial grant, and scholarship eligibility. When the rescuer loses his or her life in the performance of the heroic act, surviving dependents are eligible for continuing aid and other benefits; rescuers disabled by their actions and their dependents also are eligible for continuing aid and other benefits. Awardees are announced five times a year, following meetings of the Commission."

6. "As the Commission is a private operating foundation recognized as tax-exempt under Section 501(c)(3) of the IRS Code, donations are deductible as charitable contributions by the donor to the extent permitted by law."

Our Comments

Although a prize must be "recognized by the general public" in order for it to be a "prescribed prize", there is no requirement that it must be awarded by a Canadian person or organization. From our review of the information concerning the award that was available to us, it is our opinion that the Carnegie Hero Fund Commission Prize is a prize that is a prescribed prize for purposes of subparagraph 56(1)(n)(i) of the Act and section 7700 of the Regulations and therefore it not subject to income taxation in Canada.

We hope this opinion will be of assistance.

For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the CCRA's electronic library. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the electronic library version, or they may request a copy severed using the Privacy Act criteria, which does not remove client identity. You should make requests for this latter version to Mrs. Jackie Page at (819) 994-2898. A copy will be sent to you for delivery to the client.

Steve Tevlin
for Director
Business and Partnerships Division
Income Tax Rulings Directorate

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