22 April 1996 External T.I. 9604085 - Separate titles? - Transfer of beneficial ownership.

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 IT IS NECESSARY TO CREATE SEPARATE TITLES FOR PORTIONS OF QUARTER SECTIONS WHICH ARE ECOLOGICALLY SENSITIVE LANDS (WHICH WILL BE DONATED TO A REGISTERED CHARITY) IN ORDER THAT THE DONATION WILL QUALIFY AS A GIFT. THE DONATION WILL BE FOLLOWED BY A PURCHASE BY THE CHARITY OF THE REMAINING PORTIONS OF THE QUARTER SECTIONS.

Position:

MUST BE DETERMINED PURSUANT TO THE RELEVANT PROPERTY LAW.

Reasons:

TO QUALIFY AS A GIFT BENEFICIAL OWNERSHIP OF THE ECOLOGICALLY SENSITIVE LANDS MUST BE TRANSFERRED. WHETHER IT IS NECESSARY TO CREATE SEPARATE TITLES TO TRANSFER BENEFICIAL OWNERSHIP IS A PROPERTY LAW MATTER.

		960408
XXXXXXXXXX	Wm. P. Guglich

Attention: XXXXXXXXXX
April 22, 1996

Dear Sirs:

Re: Donation of Environmentally Sensitive Land

This is in reply to your letter of January 21, 1996 concerning a donation of environmentally sensitive land and the sale of other surrounding land to a registered charity.

You describe a situation where ranchers propose to donate portions of some quarters of land to a registered charity. Those donated lands have been classified as ecologically sensitive lands by the Provincial Government. The remaining portions of the quarter sections that are not donated will be purchased by the registered charity pursuant to a separate agreement.

You requested our views as to whether it is necessary to create separate titles for the ecologically sensitive lands in order that the donation will qualify as a gift for purposes of subsections 110.1(1) and 118.1(1) of the Income Tax Act (the "Act").

OUR VIEWS

As stated in paragraph 3 of Interpretation Bulletin IT-110R2, we consider that a gift, for purposes of subsections 110.1(1) and 118.1(1) of the Act, is a voluntary transfer of property without valuable consideration. In our view, in order that there is a transfer of property, beneficial ownership of the property must pass to the donee, pursuant to the relevant property law. However, we are unable to comment as to whether it will be necessary to create separate titles to pass beneficial ownership in the sensitive lands, described above, to the registered charity as this is a property law matter.

Although you have not requested our views on this issue we would like to comment that where there is a donation and a purchase transaction with a charity there must be two separate and independent transactions in order for the donation to qualify as a gift.

We trust our comments will be of assistance to you.

Yours truly,

R. Albert
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch