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.
970283
XXXXXXXXXX M. Eisner
November 25, 1997
Dear XXXXXXXXXX:
Re: Charitable Donations
This is in reply to your letter of January 10, 1997 concerning the above-noted subject. We apologize for the delay in replying.
You have outlined a situation with certain facts and assumptions. Essentially, you are concerned whether a debt that is owing to a shareholder by his or her wholly-owned corporation can be claimed by the shareholder in calculating a charitable donations tax credit, if the principal amount of the debt were donated to a registered charity.
As discussed in a recent telephone conversation (Eisner/XXXXXXXXXX), the Department of Finance released draft legislation on July 31, 1997 ("Legislative Proposals and Explanatory Notes Relating to Income Tax") proposing certain amendments to the charitable donations legislation in the Income Tax Act. In this regard, proposed subsection 118.1(13) provides that if an individual makes a gift of a "non-qualifying security," that gift will be ignored for the purposes of the charitable donations tax credit. The term "non-qualifying security" is defined in proposed subsection 118.1(17) to include an obligation of a non-arm's length person. That provision also sets out rules concerning claims that can be made by the donor in respect of the security where the donee disposes of the security within five years, and the determination of the fair market value of the gift. In relation to your situation, these provisions will become applicable to gifts made after July 31, 1997.
We trust our comments will be of assistance to you.
Yours truly,
John F. Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
.../cont'd
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