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 deposit paid to XXXXXXXXXX school constitutes a charitable donation when forfeited.
Position:
No.
Reasons:
The amount does not meet the criteria of being a gift and the recipient is not a registered charity.
961165
XXXXXXXXXX A.M. Brake
Attention: XXXXXXXXXX
May 24, 1996
Dear Sirs:
Re: Donation receipts
This is in response to your letter of August 24, 1995 to the XXXXXXXXXX Tax Services Office, a copy of which was forwarded on March 29, 1996 for our reply. You indicated that your school was a non-profit organization and asked whether forfeited deposits would qualify as charitable donations in situations where a deposit of $XXXXXXXXXX made with an application to re-enrol a child for the following year and the child withdraws for whatever reason forfeiting the deposit.
Subsections 118.1(2) and (3) of the Income Tax Act permit a deduction from tax payable, within specified limits, for gifts made to registered charities, if supported by official receipts. Paragraph 3 of Interpretation Bulletin IT-110R2, copy enclosed, states that a gift for income tax purposes, is a voluntary transfer of property without valuable consideration. A gift is made in any circumstance where all three of the conditions listed below are satisfied.
a)Some property - usually cash- is transferred by a donor to a registered charity.
b)The transfer is voluntary. Any legal obligation on the payor would cause the transfer to lose its status as a gift.
c)The transfer is made without expectation of return. No valuable consideration - no benefit of any kind - to the donor or to anyone designated by the donor may result from the payment.
In the situation described, a gift would not be considered to have been made since none of the above conditions are satisfied. The first condition is not met since the deposit is paid to your school which you indicate is a non-profit organization and not a registered charity; the second condition is not met as the deposit is required and the forfeiture is not a voluntary transfer of property; and the third condition is not met as the deposit is made with an expectation of return.
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
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
Email this Content