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.
920551
24(1) J.D. Brooks
(613) 957-2103
Attention:19(1)
May 29, 1992
Dear Sirs:
Re: Donations of Group Life Insurance Policies
This is in reply to your letter of February 18, 1992 in which you requested our opinion as to whether the donation of a group life insurance policy to a charity would qualify under "total charitable gifts".
Our Comments
A gift is a voluntary transfer of real or personal property from a donor who freely disposes of the property to a donee who accepts the property, provided there is no direct or indirect right, privilege, or material benefit or advantage provided by the donee.
In our Interpretation Bulletin 244R3 dated September 6, 1991, it is stated in paragraph 1 that an individual may donate a whole life or term life insurance policy to a registered charity and that such gift would be considered a charitable gift for purposes of subsection 118.1(1). To qualify, the policy must be absolutely assigned to the donee and the donee must become the registered beneficiary of the policy. As stated in paragraph 3 of the bulletin, the amount of the gift is equal to the amount by which the cash surrender value exceeds any policy loan outstanding.
If the policy has no value, there is no gift. Similarly, if the policy cannot be assigned, there is no gift.
Whether or not the assignment of a life insurance policy constitutes a gift, a donor may make donations of subsequent premium amounts and such may qualify as charitable gifts.
A copy of the bulletin, which discusses this matter and related issues, has been enclosed for your convenience.
Yours truly,
E. Wheelerfor DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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