6 January 2003 External T.I. 2002-0176935 - TAX CREDIT FOR POLITICAL CONTRIBUTIONS

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 CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: Is a credit available for both federal and provincial political contributions?

Position: General information provided.

Reasons: ITA provides federal credit for federal political contributions.

							2002-017693
XXXXXXXXXX 						Renée Shields
(613) 948-5273
January 6, 2003

Dear XXXXXXXXXX:

Re: Tax Credit for Political Contributions

This is in response to your letter of November 26, 2002 inquiring about tax credits available for provincial and federal political contributions.

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advanced Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant tax services office. The following comments are, therefore, of a general nature only and are not binding on the Canada Customs and Revenue Agency ("CCRA"). All publications referred to herein can be accessed on the CCRA website at the following address: http://www.ccra-adrc.gc.ca/tax/technical/incometax/menu-e.html.

The Income Tax Act (the "Act") provides a graduated credit that reduces the federal income tax of contributors to registered political parties and officially nominated candidates at federal elections. A "registered political party" is defined in accordance with the Canada Elections Act and refers to those parties entered in the registry of parties contained in the Canada Elections Act. These parties are federal political parties only. Accordingly, a contribution to a provincial political party or candidate will not generate a federal income tax credit. Information Circular IC 75-2R6, "Contributions to a Registered Political Party or to a Candidate at a Federal Election" discusses the federal tax credit for federal political contributions. You may review the information provided in the General Income Tax and Benefit Guide - 2002 with respect to lines 409 and 410 of the T1 General Income Tax and Benefit Return applicable to individuals.

The provinces have the authority to provide for a credit to be applied to provincial income tax for political contributions. Although not all provinces have the same formula for calculating this credit, if a contribution to a provincial political party entitles a taxpayer to a provincial tax credit, a taxpayer may benefit from this credit in addition to a federal credit for a separate contribution to a federal political party. In this regard, you may refer to line 57 of form BC428 (5010-C) together with the Provincial Worksheet (5010-D) of the T1 General - 2002 which computes the British Columbia political contribution tax credit for residents of British Columbia.

It should be noted that if a particular political contribution entitles a taxpayer to a provincial credit, then pursuant to paragraph 127(4.1)(b) of the Act, the contribution is not eligible for a federal income tax credit.

We trust that these comments will be of assistance.

Yours truly,

Mickey Sarazin, C.A.

for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch