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:
Charitable donation content of tuition paid to non-religious schools?
Position:
No amount can be treated as a charitable donation, unless it is paid to a dual capacity school that teaches religion.
Reasons:
In order to be a donation there must in fact be a gift and one of three conditions which must be met for a transfer to be a gift is where "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" (paragraph 3 of IT-110R2). Unlike other teaching or training, religious training is not viewed as consideration for purposes of the definition of a gift
962770
XXXXXXXXXX A.M. Brake
Attention: XXXXXXXXXX
September 24, 1996
Dear Sirs:
Re: Charitable Donation/Tuition Fees
This is in reply to your letter dated August 12, 1996, replacing an earlier letter bearing the same date, wherein you outlined a hypothetical situation as follows:
"Within a private, non-religious, elementary school structure, an operating budget that includes depreciation and a provision for future capital works will be created. A parent pays tuition on behalf of children at a set annual fee, based on the operating budget."
Your questions:
"1. Assuming the school is a registered charity, can a donation receipt be issued for the portion of the tuition that relates to capital and depreciation?
2. If the answer to Question #1 is no and the parent is "required" to make a donation (say, based on a pro rata portion of the depreciation and capital) together with the payment of tuition, can a charitable donation receipt be issued?"
Rather than answer your questions specifically we are providing the following general comments.
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 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.
With regard to your questions, in both scenarios, the (b) and (c) conditions above, in our view, will not have been satisfied. Specifically, for 'required' contribution, if making a contribution to the school entitles one's children to entry into that school and entry would be denied otherwise, the payment will not have been made as envisaged in condition (c) above. This would also be the case if there was a two tier tuition fee in existence with one amount for contributors and a larger amount for non-contributors.
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
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