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 donation of residual interest considered a gift of Canadian Cultural Property?
Position:
No.
Reasons:
To qualify as a gift of Canadian Cultural Property all interests must be transferred.
952477
XXXXXXXXXX Wm. P. Guglich
Attention: XXXXXXXXXX
January 4, 1996
Dear Sirs:
Re: Testamentary Gifts of Cultural Property
This is in reply to your letter of September 15, 1995 requesting our views as to the status of certain testamentary gifts.
You have described a hypothetical situation where a testator or testatrix leaves, to a spousal trust created under the terms of his or her will, capital property that are objects that the Canadian Cultural Property Export Review Board has determined meet the criteria set out in paragraphs 29(3)(b) and (c) of the Cultural Property Export and Import Act. Upon the death of the surviving spouse the objects are to be transferred absolutely to one or more designated cultural institutions.
You request our views regarding the application of subsections 118.1(5), 118.1(10), 118.1(1) ("total cultural gifts") and 70(6) and subparagraph 39(1)(a)(i.1) of the Act.
OUR VIEWS
As stated in paragraph 12 of IT-407R3 it is the Department's view that the gift of an "object" (within the definition of "total cultural gifts" in subsection 118.1(1) and the disposition of an "object" (within subparagraph 39(1)(a)(i.1)) refers to the gift and disposition of all interests in the object or objects. Consequently, a gift of a residual interest in an object would not be viewed as the gift of an object. Therefore, the gift of a residual interest would not be included in "total cultural gifts" for purposes of subsection 118.1(1) of the Act and subparagraph 39(1)(a)(i.1) would not apply to exclude any capital gains.
IT-226R describes the Department's views regarding a gift of a residual interest in real property and the valuation of a residual interest in capital property.
We agree that, where a gift of a residual interest is made by the individual's will to a donee described in subsection 118.1(1) of the Act, subsection 118.1(5) deems the gift to have been made by the individual in the taxation year in which the individual dies. As regards the taxation year in which the property is transferred to the institution upon the death of the surviving spouse, there would be no capital gain or loss or any tax credit available to the spouse trust or spouse respecting the transfer.
Subsection 70(6) would apply to determine the proceeds of disposition of the life interest, transferred to the spouse trust, to which subsection 70(5) would otherwise apply.
We trust our comments will be of assistance to you.
Yours truly,
R. Albert
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1996
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1996