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 pension income can be considered to be a research grant.
Position: No. But general comments given concerning gifting the research.
Reasons: Pension income is includable under 56(1)(a) and not under 56(1)(o) of the Act.
XXXXXXXXXX 980912
Roxane Brazeau-LeBlond, CA
May 28, 1998
Dear XXXXXXXXXX:
Re: Advance Income Tax Ruling Request
This is in reply to your letter of April 7, 1998, wherein you requested an advance income tax ruling concerning the application of paragraph 56(1)(o) to the pension income you receive from the XXXXXXXXXX.
As discussed in our recent telephone conversation (Brazeau-LeBLond/XXXXXXXXXX), we are unable to provide you with a favorable ruling. However, we can offer the following in response to your questions concerning the possibility of tax relief for donating your research.
The Income Tax Act ( the “Act”) encourages taxpayers to support the activities of registered charities and certain other organizations by allowing gifts to such organizations to qualify for a tax credit if the gift is made by an individual (other than one who has taken a vow of perpetual poverty and claimed a deduction under subsection 110(2)) or for a deduction in computing taxable income if the gift is made by a corporation. The tax credit is a non-refundable and non-transferable federal tax credit deductible against Part I tax payable.
A gift, for purposes of sections 110.1 and 118.1 of the Act, is a voluntary transfer of property without valuable consideration, 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 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 they wish. 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.
Interpretation Bulletin IT-297R2, Gifts in Kind to Charity and Others, discusses the tax consequences of making a gift in kind. Where it is established on the facts in a particular case that a donation is a gift in kind, the donor is deemed to have received proceeds of disposition equal to the fair market value of the property donated. The fair market value of the gift in kind is also the relevant amount for purposes of calculating, for individuals, the federal tax credit under subsection 118.1(3) of the Act. Paragraph 3 of IT-297R2 states that a "gift in kind, however, does not include a gift of services." If it is established on the basis of the facts in a particular case that it is a donation of services, it would not be considered a gift in that services are not property and a federal tax credit under subsection 118.1(3) of the Act would not be available to the individual.
We are forwarding for your information Interpretation Bulletins IT-297R2 and IT-110R3, Gifts and official donation receipts, as well as IT-288R2, Gifts of Capital Properties to a Charity and Others.
We trust our comments will be of assistance.
Yours truly,
R. Albert
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
- 2 -
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, 1998
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, 1998
Email this Content