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 a contribution to a heritage trust qualifies as a charitable gift.
Position:
No, the contribution does not meet the requirements for a gift.
Reasons:
The contribution appears to be a contribution of capital to the trust which may be returned to the contributor on the termination of the trust.
XXXXXXXXXX 991589
Attention: XXXXXXXXXX
July 12, 1999
Dear Sirs:
Re: Contributions to a Heritage Trust
This is in reply to your letter dated May 21, 1999, concerning contributions to a heritage trust and whether an official tax receipt can be issued by the XXXXXXXXXX (“Foundation”).
In your letter, you advise that the Foundation, an agent of Her Majesty in the right of XXXXXXXXXX, is contemplating a scenario where it would jointly contribute, with an individual, organization or municipality, to a trust fund for the long-term maintenance and care of a formally designated heritage site or structure. The Foundation, however, would not create or manage the fund, but would contribute a certain portion of money, and would stipulate the work items to which the interest income could be directed. You further advise that if the partnership were to be discontinued, both parties would recover their initial investment, and split any remaining interest income. Your specific question is whether the Foundation can issue a tax receipt in respect of the contribution to the heritage trust by the other party when the trust is not controlled by the Foundation.
In order for the Foundation to issue an official tax receipt, a gift must have been made to the Foundation in its capacity as agent of the Crown. As stated in paragraph 3 of IT-110R3, a gift, for the purposes of sections 110.1 and 118.1 of the Income Tax Act, is a voluntary transfer of property without valuable consideration. Generally, a gift is made if all three of the following conditions are met:
a) some property - usually cash - is transferred by the donor to a registered charity;
b) the transfer is voluntary; and
c) the transfer is made without expectation of return. No benefit of any kind may be provided to the donor or to anyone designated by the donor, except where the benefit is of nominal value.
In the situation described, it is our view that the contribution to the heritage trust would not be a gift to the Foundation. The contribution appears to be a capital contribution to the heritage trust that may be returned to other party when the trust is dissolved along with the other party’s share of any remaining interest income earned by the trust. Accordingly, an official tax receipt should not be issued.
We trust these comments will be of assistance.
Yours truly,
Manager
Financial Institutions Section
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
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