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.
Principal Issues: Whether an inter-vivos trust may claim a donation tax credit under section 118.1 of the Act where, but for discretionary decisions made by the trustees, the gift would not have been made.
Position: Question of fact but generally yes.
Reasons: Previous positions
XXXXXXXXXX 2003-001504
March 1, 2004
Dear XXXXXXXXXX:
Re : Charitable Gifts from a Trust
We are responding to your letter of April 16, 2003, requesting an Advance Income Tax Ruling on the tax implications of a draft trust arrangement. In particular you were requesting a ruling as to whether the distributions that may be made to a Canadian registered charity, would entitle the distributing trust to a tax credit under section 118.1 of the Income Tax Act (the "Act"). As we had previously explained, we are not able to provide an advance income tax ruling to you at this time, as the tax implications will depend upon future facts and transactions that cannot be ascertained with any certainty at this time. We did agree however, to provide you with general comments on gifts by trusts and gifts to organizations outside of Canada.
Where a gift is made of property of an inter-vivos trust to a qualified donee and, but for the exercise of discretion granted to the trustees of the trust under the terms of the trust, the gift to the qualified donee would not be made, it is our general view that the trust would be entitled to claim a donation tax credit in respect of the distribution. Whether any particular gift of trust property would be made but for the exercise of trustee discretion under the terms of a particular trust is a question of fact which could only be determined by reviewing all relevant documentation related to the gift of property.
Where the recipient of the gift is to be a Canadian registered charity, it is our view that the individual making the gift will not be entitled to claim a charitable donation tax credit for purposes of the Act, unless the recipient has obtained its status as a registered charity at the time that the gift is actually made.
While our comments above are not binding on the Canada Revenue Agency in respect of any particular fact situation, we do hope that our comments are of assistance to you.
Yours truly,
F. Lee Workman
Manager
Financial Institutions Section
Income Tax Rulings Directorate
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, 2004
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, 2004
Email this Content