9 December 1996 External T.I. 9631585 - WHETHER A GIFT?

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 proposed donation in specific fact situation relating to a proposed transaction considered a gift?

Position:

Determination can only be made in context of an advance ruling request.

Reasons:

IC 70-6R2.

									963158
XXXXXXXXXX							Wm. P. Guglich
(613) 957-2102

Attention: XXXXXXXXXX

December 9, 1996

Dear Sirs:

Re: Donations and Gifts

This is in reply to your letter of September 16, 1996 concerning donations of telephone rebates.

It appears that the interpretation you seek relates to a proposed transaction to be undertaken by a specific taxpayer and, therefore, we bring to your attention Information Circular 70-6R2 dated September 28, 1990 issued by Revenue Canada, Taxation. Confirmation with respect to proposed transactions involving specific taxpayers will only be provided in response to a request for an advance income tax ruling. If you wish to obtain an advance income tax ruling for a particular taxpayer with respect to specific transactions which are contemplated, a written request for an advance income tax ruling can be submitted in accordance with the Information Circular. Nevertheless, we can offer the following general comments.

The term "gift" is not defined in the Act and therefore assumes its common law meaning. In our view, a gift at common law is a voluntary transfer of 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, charity or like impulses. After the donation has been made, this determination can be made upon a complete examination of all the facts. Before the donation has been made, this determination can only be made upon a complete examination of all of the facts and proposed transactions in the context of an advance income tax ruling request. Therefore at this time, the Department cannot make a determination whether the payment in the situation described in your letter would meet the definition of total charitable gifts in subsection 118.1(1) of the Act.

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