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 proposed donations considered a gift?
Position:
YES
Reasons:
Conditions respecting definition of gift met.
XXXXXXXXXX 952391
XXXXXXXXXX
XXXXXXXXXX 1996
Dear XXXXXXXXXX:
Re: XXXXXXXXXX
This is in reply to the letter dated XXXXXXXXXX from XXXXXXXXXX and your letters of XXXXXXXXXX requesting an advance income tax ruling on your behalf respecting the XXXXXXXXXX You have requested that our response be directed to you.
We understand that to the best of your knowledge and that of the taxpayers involved: none of the issues involved in the requested rulings is being considered by a District Taxation Office or a Taxation Centre in connection with a tax return already filed, and none of the issues involved in the requested rulings is the subject of any notice of objection or is under appeal.
Our understanding of the facts, proposed transactions and purpose of the proposed transactions is as follows:
Facts
1.XXXXXXXXXX was incorporated on XXXXXXXXXX under the XXXXXXXXXX Business Corporations Act. It is a private corporation and a taxable Canadian corporation, as these expressions are defined in subsection 89(1) of the Income Tax Act (the "Act").
2.XXXXXXXXXX developed the XXXXXXXXXX for the purpose of raising funds XXXXXXXXXX in Canada which are registered charities as defined in subsection 248(1) of the Act.
3. XXXXXXXXXX
4. XXXXXXXXXX
5. XXXXXXXXXX
6. XXXXXXXXXX
7. XXXXXXXXXX
8. XXXXXXXXXX
9. XXXXXXXXXX
10. XXXXXXXXXX
11. XXXXXXXXXX
12. XXXXXXXXXX
13. XXXXXXXXXX
Proposed Transactions
14. XXXXXXXXXX
15. XXXXXXXXXX
16. XXXXXXXXXX
17. XXXXXXXXXX
18. XXXXXXXXXX
Purpose of Proposed Transactions
19.The purpose of the proposed transactions is to raise funds for XXXXXXXXXX.
Ruling
Provided that the preceding statements constitute a complete and accurate disclosure of all of the relevant facts, proposed transactions, and purpose of the proposed transactions, and provided that the proposed transactions are completed in the manner described above, our ruling is as follows:
Gifts made by a Patron, who is an individual, to a Beneficary that is a registered charity, as defined in subsection 248(1) of the Act, will entitle the individual to a tax credit, calculated in the manner provided in subsection 118.1(3), on the basis that the gifts are included in calculating the individual's "total charitable gifts" pursuant to the definition of that term in subsection 118.1(1), provided official receipts containing prescribed information are filed as required by subsection 118.1(2).
The above ruling, which is based on the Act in its present form and does not take into consideration any proposed amendments thereto, is given subject to the general limitations and qualifications set out in Information Circular 70-6R2 dated September 28, 1990 and special release thereto dated September 30, 1992, and will be binding on Revenue Canada, Taxation provided that the proposed transactions are completed by XXXXXXXXXX.
The Ruling above applies to gifts which are true gifts at common law. In our view, a true gift is a voluntary transfer of real or personal property from a donor, who must freely dispose of his or her property, to a donee, who receives the property given. The transaction may not result directly or indirectly in a right, privilege, material benefit or advantage to the donor or to a person designated by the donor. To qualify, the donation must be in the form of an outright gift. Any legal obligation on the donor would cause the transfer to lose its status as a gift. Further, in order for an expenditure to be considered as gift, it must be made without conditions, from detached and disinterested generosity, out of affection, respect, or charity or like impulses, and not from the constraining forces of any moral or legal duty. The donee must have an unfettered right to use a donation as they wish. However, it is the Department's practice to view donations subject to a general direction from the donor as acceptable, provided that no benefit accrues to the donor, the directed gift does not benefit any person not dealing at arm's length with the donor and decisions regarding utilization of the donation within a program rest with the donee.
XXXXXXXXXX
We trust our comments will be of assistance to you.
Yours truly,
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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