14 August 1990 Internal T.I. 901587 F - Charitable Gifts

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.

August 14, 1990

Dear Sirs:

Re: Charitable Gifts

This is in reply to your letter of June 28, 1990 addressed to the Vancouver District Office and further to our telephone conversations of July 24 and 25, 1990 regarding the correspondence attached to your letter and other matters relating to gifts of capital to charitable organizations.

As discussed, many of the questions raised in your letter have already been addressed in the correspondence attached to your letter and need not be addressed again. Most of the additional information that you require is set out in various Departmental publications. We are, therefore, enclosing the following pamphlets and Interpretation Bulletins for your information:

1.     Gifts in Kind

2.     Special or Limited Purpose Funds

3.     Registered Charities: Questions and Answers

4.     IT-111R, Annuities Purchased from Charitable Organizations

5.     IT-110R2, Deductible Gifts and Official Donation Receipts

6.     IT-288, Gift of Tangible Capital Properties to Charity and Others

7.      IT-297R, Gift in Kind to Charity and Others

If after reviewing the enclosed publications you still have unanswered questions you may wish to refer them verbally or in writing to staff at the Vancouver District Taxation office or in writing to this office.

Where you have a specific proposed transaction in mind it will be necessary to apply for an advance income tax ruling in accordance with the guidelines in Information Circular 70-6R, a copy of which is also enclosed for your information.

With respect to your specific question about the gifting of a building to a charity in return for an annuity, you will find information on this subject in both the pamphlet and Interpretation Bulletin about gifts in kind and in IT-111R which deals with the subject of annuities issued by registered charities.

We note that one of your proposals with respect to the gifting of a building to a charity involves an annuity payment back to the donor in the form of a building. We are of the view that the words, "an amount payable on a periodic basis" in the definition of "in subsection 248(1) of the Income Tax Act, requires that there be more than one annuity payment in a contract before it can be considered to be an "annuity" contract. Thus it is highly unlikely that a single payment to an annuitant of a building could be an annuity payment. We also point out that the payment back of a building would not only not qualify as an annuity payment but if it was contemplated that the donor would get back his own building at some future time, there would be no gift in the first place.

We trust that our comments and the enclosures will be of assistance to you.

Yours truly,

for DirectorBusiness and General DivisionRulings DirectorateLegislative and IntergovernmentalAffairs Branch

c.c.      Gerry SouzaSection 169-25 Vancouver District Office