26 November 1990 Income Tax Severed Letter 5-902939 - [901126]

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

W.P. Guglich (613) 957-2102

XXXX

Attention: XXXX

November 26, 1990

Dear Sirs:

This is in reply to your letter of October 15, 1990, wherein you requested our views whether a gift would be considered to have been made in the following situation.

XXXX

The Department's position is that in order to qualify as a gift there must be a voluntary transfer of real or personal property from a donor, who must freely dispose of his or her property, to a qualified donee who receives the property given. To qualify, the donation must be in the form of an outright gift. Any legal obligation on the payor would cause the transfer to lose its status as a gift. Further, in order for an expenditure or transfer of property to be considered a gift, it must be made without conditions, from detached and disinterested generosity, out of affection, respect, or charity or like impulses, and not from the constraining forces of any moral or legal duty.

In our view the lottery winner in the situation described above would not be considered to have made a gift for purposes of sections 118.1 or 110.1 of the Act since he had agreed prior to acquiring the lottery ticket that XXXX would receive the winning prize money. If a gift could be considered to have been made at all, it would be a gift of the chance to win represented by a particular ticket, the value of which would presumably be equal to the lesser of the value of the prize divided by the number of tickets eligible to win and the face value of the ticket.

We trust this will be of assistance to you.

Yours truly

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