2 October 1990 Ministerial Letter 902538 F - Donation made by Vendor

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.

19(1)

October 2, 1990

Dear Sirs:

24(1)

This is in reply to your letter of September 13, 1990, concerning the offers to purchase the above named property. Since the situation described in your letter appears to involve actual taxpayers and proposed transactions, that could best be considered by way of an advance income tax ruling request, we are unable to comment on the specifics of the series of transactions described therein. We are however, prepared to offer the following by way of general comments.

A gift is 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.

The Department's position is that a donation made by a vendor must be separate from and unrelated to the sale in order to be considered as a gift (See paragraph 14 of Interpretation Bulletin IT-110R2 which discusses a similar transaction involving a donation by a purchaser). Of course, a donation receipt should not be issued by a charity or a municipality when there has not been a bona fide gift.

We trust our comments are of assistance.

Yours truly,

for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch