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: Guidance requested with respect to the issuance of charitable donation receipts in a situation where a member donor is entitled to pay less for a cemetery plot than a non-member.
Position: The eligible amount of the gift will be reduced by the value of the advantage provided to the donor members which would include the right to purchase a cemetery plot at a discount.
XXXXXXXXXX 2008-028417
Sylvie Danis
Attention: (613) 957-3496
November 24, 2008
Dear XXXXXXXXXX :
Re: Charitable Donation Receipts
This is in response to your request for guidance with respect to the issuance of charitable donation receipts in a situation where a member donor is entitled to pay less for a cemetery plot than a non-member.
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, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we offer the following general comments.
The CRA's guidelines on Split-Receipting are contained in Income Tax Technical News No. 26 which is available on our website at www.cra-arc.gc.ca. There is a discussion of membership fees on page 5 of that release.
Proposed amendments to the Act will allow the transfer of property to qualify as a gift, for tax purposes, in certain circumstances where a donor has received consideration for property transferred to a charity or other qualifying donee after December 20, 2002. Proposed subsection 248(30) sets out that a transfer of property will not necessarily be disqualified from being a gift, provided the amount of the advantage does not exceed 80% of the value of the gift or the donor establishes to the satisfaction of the Minister that the transfer was made with the intention to make a gift.
Subsection 248(31), as proposed, provides that the eligible amount of a gift is the amount by which the fair market value (FMV) of the property that is subject of the gift exceeds the amount of the advantage, if any, in respect of the gift.
Proposed subsection 248(32) provides that the amount of the advantage is generally the value, at the time the gift is made, of any property, service, compensation or other benefit received, or expected to be received in the future, by the donor as partial consideration for, or in gratitude for the gift.
In applying the proposed gifting legislation to the situation described, the "eligible amount" of the gift will be reduced by the value of the "advantage" provided to the members which would include the right to purchase a cemetery plot at a discount.
It is the responsibility of the charity to determine the value of the advantage provided. As noted in Income Tax Technical News (ITTN) No. 26 if the value of an advantage cannot be reasonably ascertained, no charitable tax deduction or credit will be allowed. In this regard, the donee will be required to identify the advantage and the amount thereof on any receipt provided to the donor in accordance with the proposed amendments to section 3501 of the Income Tax Regulations.
We trust the above comments are of assistance. However, as stated 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 Revenue Agency in respect of any particular situation.
Yours truly,
F. Lee Workman
Manager
Charitable and Financial Institutions Sectors
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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