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 the INDEX: Award is a prescribed prize pursuant to section 7700 of the Income Tax Regulations.
Position: In light of the information provided, yes.
Reasons: The award satisfies the criteria of section 7700 of the Income Tax Regulations.
2008-026573
XXXXXXXXXX Marie-Claude Hébert,
Lawyer
May 29, 2008
Dear XXXXXXXXXX :
Re: Prescribed Prize - Index: Award
This is in response to your letter received January 22, 2008, in which you requested our views on whether the Index: Award (the "Award") is a prescribed prize under section 7700 of the Income Tax Regulations (the "Regulations").
INDEX: is a global non-profit network organization that focuses on design that substantially improves important aspects of human life worldwide. Through a wide range of activities and events, INDEX: is the catalyst for Design to Improve Life: an organization that spurs public and professional awareness of the great - and too often unnoticed - human and commercial potential of Design to Improve Life.
INDEX: presents the best examples of Design to Improve Life, awards the very best and provides access to the underlying processes, thinking and people by:
- awarding the biggest design award in the world (the Index: Award), worth 500,000 euros, for Design to Improve Life (five winning designs are each awarded 100,000 euros);
- presenting international design exhibitions displaying Design to Improve Life;
- hosting summits for world leaders on design and innovation; and
- publishing and distributing knowledge about Design to Improve Life.
Written confirmation of the consequences inherent in particular transactions are given by this directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R4. Where the particular transactions are partially completed or completed, the enquiry should be addressed to the relevant Tax Services Office. Notwithstanding the foregoing, we are providing the following comments. Section 7700 of the Regulations defines a "prescribed prize" for the purpose of paragraph 56(1)(n) of the Income Tax Act. Such a prize is defined as one that is recognized by the general public and that is awarded for meritorious achievement in the arts, the sciences or service to the public but does not include any amount that can reasonably be regarded as having been received as compensation for services rendered or to be rendered.
From our review of the information concerning the Award that is available to us, it is our opinion that the Award is a prescribed prize as described in section 7700 of the Regulations for the following reasons:
(a) The Award is recognized by the general public:
- In 2005, 538 projects were presented to the Award's jury, which 4 were from Canada and the rest were from 42 other countries;
- In 2005, the Award was presented at a ceremony in Denmark, attended by hundreds of guests and many important dignitaries;
- The Award was publicized in many local, national, international and trade publications;
- The nominations for the Award are made by an international jury made up of leading designers, researchers, writers and thinkers from around the world.
(b) The Award is received for meritorious achievement in the service to the public:
- The continuous focus of the Award is design that substantially improves aspects of human life;
- The Award encourages designers to work to solve the global challenges of humanity.
(c) The Award can reasonably be regarded as hot having been received as compensations for services rendered or to be rendered.
As indicated in paragraph 22 of Information Circular 70-6R4, the above comments do not constitute an income tax ruling and accordingly are not binding on the Canada Customs and Revenue Agency. Our practice is to make this specific disclaimer in all instances in which we provide an opinion.
We trust the above comments are of assistance.
Yours truly,
François Bordeleau, LL.B.
Manager
Business and Partnership Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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