17 December 1996 External T.I. 9639805 - DONATIONS TO THE CROWN

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:

Donations to the Crown

Position:

Gave position in ATR-63

Reasons:

General issues dealt with in the ATR

XXXXXXXXXX 963980

Attention: XXXXXXXXXX

December 17, 1996

Dear Sirs:

Re: Donations to the Crown

This is in reply to your facsimile of November 26, 1996 in which you request a ruling on whether donations received by XXXXXXXXXX a Crown Corporation of the Province of XXXXXXXXXX, maintain their tax deductibility status when the donation has been directed by the donor for a specific purpose or organization(s).

The situation described in your letter is an actual fact situation and written confirmation of the tax implications inherent in proposed transactions are given by this Directorate only where the transactions are the subject of an advance income tax ruling submitted in the manner set out in Information Circular 70-6R2 (copy enclosed). Consequently, we can only offer the following general comments.

The Department's position with respect to Donations to Agents of the Crown is stated in Income Tax Ruling ATR-63 (copy enclosed).

It is also our view that a true gift is a voluntary transfer of real or personal property from a donor who must freely dispose of the 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 to make the transfer would cause the transfer to lose its status as a gift. Further, in order for an expenditure 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 it wishes. 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 have also enclosed copies of Interpretation Bulletins IT-110R2 and the special release to this bulletin which deals with Deductible Gifts and Official Donation Receipts and Interpretation Bulletin IT-297R2 Gifts in Kind to Charity and Others.

In accordance with paragraph 21 of information Circular 70-6R2, the above comments are not advance income tax rulings and are not binding on the Department.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch