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: Clarification of the receipting requirements for political contributions.
Position: General comments provided.
Reasons: The legislation.
XXXXXXXXXX
2014-051696
April 25, 2014
Dear XXXXXXXXXX:
Re: Official receipts for political contributions
This is in response to your letter of January 4, 2014 concerning the issuance of receipts for contributions to registered political parties and registered associations. In your letter you asked whether receipts generated using a software program made available by Elections Canada are compliant with the amendments to the political contribution tax credit rules enacted by Bill C-48. You also indicated that you would be interested in our views with respect to certain legal opinions published on your website.
Our comments
The role of the Income Tax Rulings Directorate is to interpret Canada's income tax law. As such, we are unable to comment on the software program referred to in your letter since this matter is outside of our mandate.
However, we can provide you with the following general comments regarding the interpretation and application of the income tax rules relating to the political contribution tax credit. This technical interpretation does not confirm the income tax treatment of a particular situation involving a specific taxpayer. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R5, Advance Income Tax Rulings.
Bill C-48 amendments
Bill C-48 (which received Royal Assent on June 26, 2013) amended subsection 127(3) of the Income Tax Act (the "Act") consequential to the addition of subsections 248(31) and (32) of the Act. Subsection 127(3) of the Act provides a graduated federal tax credit based on the eligible amount of a monetary contribution (as defined in the Canada Elections Act) made by a taxpayer in the year to a registered party, a registered association or a candidate in a federal election or by-election. The maximum annual tax credit available is $650 per taxpayer. Subsection 248(31) of the Act defines the eligible amount of a monetary contribution as the amount by which the fair market value of the property that is the subject of the monetary contribution exceeds the amount of the advantage, if any, in respect of the monetary contribution. Pursuant to subsection 248(32) of the Act, the amount of the advantage in respect of a monetary contribution is generally the fair market value of any property, service, compensation or other benefits received, or expected to be received in the future, by the contributor, or a person or partnership who does not deal at arm's length with the contributor, that is consideration for, or in gratitude for the monetary contribution, or in any other way related to the monetary contribution. These amendments are generally applicable to monetary contributions made after December 20, 2002.
Receipting requirements
All claims for the political contribution tax credit must be supported by an official receipt containing prescribed information. In this regard, sections 2000 and 2002 of the Income Tax Regulations provide rules regarding the preparation and issuance of receipts for the purpose of the political contribution tax credit. These sections were amended by Bill C-48 to provide that every official receipt contain, in addition to the information already prescribed, the eligible amount and a description of and the amount of the advantage, if any, in respect of a monetary contribution. These amendments apply to receipts issued after June 26, 2013.
For further information regarding political contributions including the receipting requirements, please refer to Information Circular IC 75-2R8 Contributions to a Registered Party, a Registered Association or to a Candidate at a Federal Election which is available on our website at www.cra-arc.gc.ca. Specific receipting concerns may be directed to the Charities Directorate of the CRA (see contact information in IC 75-2R8 or on our website).
Finally, we note that it is not our practice to review or comment on non-CRA articles or opinions. However, we will provide general comments in response to specific enquiries relating to the interpretation of the provisions of the Act.
We trust the above comments are of assistance.
Yours truly,
Director
Financial Industries and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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