23 October 1992 Income Tax Severed Letter 9224755 - 24(1) - Municipality

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.

922475
24(1) J.D. Brooks
(613) 957-2103

Attention: 19(1)

October 23, 1992

Dear Sirs:

Re: Capability of Issuing Income Tax Receipts

This is in reply to your letter of December 19, 1991 addressed to our Winnipeg District Office. This letter, along with your subsequent letter of September 4, 1992, has been forwarded to us for reply. You queried whether the 24(1) would be able to issue income tax receipts for donations received, or in the alternative whether its sponsoring rural municipalities could accept donations on behalf of the 24(1) and issue tax receipts. You pointed out that the 24(1) has been determined by the Minister of National Revenue pursuant to the authority granted him under section 123 of Bill C-62 to be a municipality for purposes of the Goods and Services Tax.

Although the definition of municipality in section 2 of the Excise Tax Act enables the Minister of National Revenue to designate local authorities which would otherwise not qualify, as being municipalities for purposes of the Goods and Services Tax, there is no similar

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provision in the Income Tax Act. Thus only those entities which are legally municipalities can be considered to be municipalities. Based on our understanding of the facts, the 24(1) is neither a municipality nor a registered charity and therefore is not able to issue income tax receipts for donations it receives. Although the 24(1) is not a registered charity, it is possible that it may be able to become one. If that is a prospect which you would like to pursue, you should contact our Charities Division at the following address:

400 Cumberland Street
Ottawa, Ontario
K1A 0L8.

Their toll-free telephone number is 1-800-267-2384.

As indicated in paragraph 16(f) of our Interpretation Bulletin 110R2, although gifts directed to a person designated by a donor are not eligible for an income tax receipt, donations made to a Canadian municipality can be subject to a general direction but only in respect of the particular program in which the donations are to be used. Decisions regarding the utilization of the donations within the program must remain the exclusive responsibility of the municipality. Furthermore, in order to qualify for this administrative concession regarding general directions, it is necessary that the program being funded be operated under the authority of the municipality. Although various rural municipalities may sponsor the 24(1), it is apparent that the 24(1) does not operate under the authority of the municipalities. That being so, it would not be feasible for the municipalities to issue tax receipts for donations they receive and forward to the 24(1).

It may also be of interest to you that certain types of donations are not eligible for tax receipts even where a charity is involved. For example, as stated in our Information Circular 80-10R, the donation of personal services does not qualify as a receiptable charitable donation. Also, since in order for a contribution to qualify as a gift there must be no consideration received, the payment of a portion of the costs by landowners for work performed on their property would not qualify as a gift regardless of who the donee was.

We regret that we are not able to provide you with the interpretation which you would have liked to receive.

Yours truly,

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

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