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 donation of the savings realized by individuals participating in XXXXXXXXXX constitute a gift for income tax purposes.
Position TAKEN:
Not a gift for income tax purposes.
Reasons FOR POSITION TAKEN:
Unlikely that the donation would be voluntary and the donation would not be without consideration, since it would not be entirely separate from and unrelated to the purchase of XXXXXXXXXX
5-942227
XXXXXXXXXX C.Chouinard
Attention: XXXXXXXXXX
September 13, 1994
Dear Sir:
Re: Gifts to the XXXXXXXXXX
We are writing in reply to your letter of August 30, 1994, wherein you requested our comments on the tax status of donations to the XXXXXXXXXX
XXXXXXXXXX
As indicated in paragraph 3 of Interpretation Bulletin IT-110R2 (a copy of which is enclosed), 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 municipality;
(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.
As regards the first condition, as indicated in paragraph 16(f) of the above-mentioned Interpretation Bulletin, 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, it is necessary that the program being funded be operated under the authority of the municipality. In light of the limited information you have provided, we cannot comment on whether the first condition would be met in your situation.
XXXXXXXXXX
Paragraph 13 of Interpretation Bulletin IT-110R2 indicates that "the sale of items at cost or less than cost by a charity with the expectation that a donation would thereby be encouraged would jeopardize the resultant donations to the extent that the Department would view the transactions as related".
We trust that these comments will be of assistance.
Yours truly,
A.M. Brake
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch
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