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.
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear Sirs:
RE: XXXXXXXXXX
This is in reply to your letter dated November 30, 1992 requesting a technical interpretation on behalf of your clients the XXXXXXXXXX would qualify as donations to a "Canadian municipality" within the meaning of the charitable deduction/credit provisions of the Income Tax Act (the "Act").
The situation set out in your letter is quite specific and relates to particular contemplated or completed transactions. Assurance as to the tax consequences of contemplated transactions can only be given in response to a request for an advance income tax ruling as outlined in Information Circular 70-6R2. If you wish to obtain a binding interpretation with respect to an actual case, a request for an advance income tax ruling should be submitted. Although we are unable to provide any binding assurance here with respect to the queries you have raised, we do offer the following general comments for your information.
Our Comments:
Paragraph 16(f) of IT-110R2, Deductible Gifts and Official Donation Receipts, expresses the Department's view that donations made to a Canadian municipality can be subject to a general direction, that is, for use in a particular program. However, decisions regarding the utilization of the donations within the program must remain the exclusive responsibility of the municipality and not the donee.
Paragraph 3 of IT-110R2 describes three conditions that must be satisfied in order that a payment may qualify as a gift for purposes of paragraph 118.1(1)(d) of the Act. In particular condition (b) requires that the municipality have an unfettered right to use the money. Where a municipality has the unfettered right to use a donation as they wish, such a gift would be considered to be a donation for the purposes of subsection 118.1(1) of the Act. However, it is the Department's practice to view donations subject to a general direction as acceptable, provided that no benefit accrues to the donor and the designated gift does not benefit any person not dealing at arm's length with the donor.
Donations can be receipted by a Canadian municipality on behalf of an organization, program, or project which operates under the authority of the municipality (e.g., a committee established by a municipal bylaw).
We trust these comments will be of assistance to you.
Yours truly,
R. Albert for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
cc. Jan Strike Charities Division Cumberland Place - 5th floor
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