25 October 1989 Income Tax Severed Letter 5-8585 - [Charitable Donations Tax Credit]

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.

Revenue Canada Taxation Head Office

XXX

J.A. Szeszyski (613) 957-2103

Attention: XXXX

OCT 25 1989

Dear Sirs:

Re: Charitable Donations Tax Credit

We are responding to your letter of August 25, 1989, requesting confirmation as to how the provisions of subsections 118.1(1) and (3) of the Income Tax Act (the "Act") are to be interpreted.

In your letter, you have outlined the application of the above-noted provisions to situations involving donations of charitable and cultural gifts and how unused amounts should be treated in subsequent years. You have noted that, in the calculation of the credit under subsection 118.1(3) of the Act, the appropriate percentages were applied to "total gifts" for the year as that term is defined in the Act and that an unused amount of the value of gifts may be used in future years. The definition of "total gifts" includes references to "total charitable gifts" and "total cultural gifts" both of which terms are also defined in subsection 118.1(1) of the Act. Under the respective definitions, the total gifts for the year in that category include amounts of gifts made in the five immediately preceding taxation years to the extent that they were neither deducted in computing taxable income for a taxation year prior to 1988 nor used in the determination of the tax credit after 1987.

It is your further understanding that, in computing the "total gifts" for future years, the total charitable gifts made in the year can be included before utilizing cultural gifts available from preceding taxation years.

Your understanding of the provisions is correct. With the repeal of subsection 110(4) of the Act (effective for the 1988 and subsequent taxation years) the requirement to use up all prior year donations before claiming in respect of current year gifts has been removed. A similar provision in connection with the charitable donations tax credit under section 118.1 of the Act was not enacted.

Consequently, as noted in your letter, current year total charitable gifts may be claimed before available past donations are used.

Yours truly,

for Director Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch

c.c. Assessing and Enquiries Directorate