28 April 1994 Internal T.I. 9408527 - CHARITABLE DONATIONS - KOSHER-APPROVED FOOD PRODUCTS

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Whether the purchase of kosher-approved food products from various retailers constitutes a charitable donation?

Position TAKEN:

not a charitable donation

Reasons FOR POSITION TAKEN:

It does not constitute an outright gift, nor is it a gift to a registered charity, and official receipts have not been submitted.

		April 28, 1994

	Assessment of Returns DirectorateHead Office
	      Rulings Directorate
	Attention:  L. Lalonde	C. Chouinard
		957-8953
7-940852

Charitable Donations - Kosher Products

This is in response to your memorandum of April 6, 1994 wherein you requested our opinion regarding the acceptability of claims for charitable donations in respect of the purchase of kosher food products.

We understand, from the articles submitted by the taxpayers in support of their claims for a deduction, that kosher-approved food products are food products that have been made in accordance with the kosher regulations. Since the costs of making products kosher are passed on to consumers of the products, the articles conclude that the purchase of such products amounts to a direct contribution to Jewish charities for which a deduction can be claimed.

Subsections 118.1(2) and (3) of the Income Tax Act (the "Act") permit a deduction from income, within specified limits, for gifts made to registered charities, if supported by official receipts issued in accordance with the Regulations. As indicated in paragraph 3 of Interpretation Bulletin IT-110R2, a gift is a voluntary transfer of property without valuable consideration. A gift can be said to have been made where all of the following conditions are satisfied:

(a)property (usually cash) is transferred by a donor to a registered charity;

(b)the transfer is voluntary; and

(c)no consideration or benefit accrues to the donor or to anyone designated by the donor as a result of the transfer.

In the situation outlined in the articles, a gift would not be considered to have been made since none of the above conditions are satisfied. The first condition is not met as the purported donation is made to retailers of kosher-approved food products which are not registered as charities; the second condition is not met as the purported cash donation is part of the cost of the food products and is not made voluntarily; and the third condition is not met as the purported donation is not without consideration since the taxpayers receive food products in exchange for their donation. Consequently, the taxpayers' claims for charitable donations should be disallowed.

Furthermore, according to subsection 118.1(2) of the Act, charitable donations must be supported by official receipts. If the taxpayers in question have not submitted such receipts, their claims for a deduction under subsection 118.1(3) should be denied on that basis alone.

R. Albert
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch