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.
960061
XXXXXXXXXX B. Kerr
Attention: XXXXXXXXXX
August 13, 1996
Dear Sirs:
Re: Subsection 118.1(2) of the Income Tax Act (the "Act")
This is in reply to your letter of December 19, 1995, concerning gifts to a university. We apologize for the delay in responding.
You have described a complex transaction that involves a foundation that is an agent of Her Majesty in right of a province and a trust arrangement for the purpose of making a conditional gift to a university. You have asked us whether charitable donation receipts may be issued in accordance with subsection 118.1(2) of the Act.
The situation described in your letter involves actual proposed transactions with identifiable taxpayers. Assurance as to the tax consequences of actual proposed transactions will only be given in the context of an advance income tax ruling. The procedures for requesting an advance income tax ruling are outlined in Information Circular 70-6R2 dated September 28, 1990, and the Special Release thereto dated September 30, 1992, issued by Revenue Canada, Taxation. However, we can offer the following general comments.
As you know, the Department's views concerning gifts to a charity of an equitable interest in a trust are outlined in Interpretation Bulletin IT-226R, and for your information, Income Tax Ruling ATR-63 deals with Donations to Agents for the Crown involving a Provincial Foundation. However, the situations described in your letter are not identical to those described in these publications and you have not provided us with enough information to determine whether all the requirements would be satisfied in such situations. In any event, in order to qualify as a charitable donation, there must be a true gift at common law, which is a question of fact that we are unable to determine.
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 a donation to be considered a 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.
We trust that these comments will be of assistance.
Yours truly,
R. Albert
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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