21 October 1999 Ministerial Letter 9924518 - CONTRIBUTION OF SERVICES NOT 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 contributions of services qualify as a charitable gift.

Position:

No.

Reasons:

Contributions of services are not property. Since a gift must involve property, contributions of services do not qualify as a gift for income tax purposes.

Signed on October 21, 1999

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable Martin Cauchon, Minister of National Revenue, has asked me to reply to your letter of August 14, 1999, addressed to the Right Honourable Jean Chrétien, Prime Minister of Canada, concerning interpretation bulletins. A copy of your letter was forwarded to Mr. Cauchon by the Office of the Prime Minister on August 26, 1999.

In your letter, you express concern that laws passed by Parliament are being overridden by interpretation bulletins. Your concern arises from the disallowance of your claim for a charitable donation tax credit for your donation of scientific research and teaching activities to XXXXXXXXXX in XXXXXXXXXX. Your claim was disallowed on the basis that your donation was a donation of services and therefore did not qualify as a gift for income tax purposes. The Department's position that contributions of services are not property and do not qualify as a gift is set out in paragraph 15(d) of Interpretation Bulletin IT-110R3, a copy of which is attached. In your view, scientific research and teaching activities should not be classified as a service. You note that such activities are distinguishable from ordinary volunteer services provided to charitable organizations. Given your view that the position in IT-110R3 is against the spirit of the income tax law, you think that this bulletin should be repealed.

The purpose of interpretation bulletins is to provide Revenue Canada's interpretation of the income tax law that it administers. Interpretation bulletins are not law. The law is contained in the Acts themselves and in the Regulations. However, interpretation bulletins can generally be relied upon as reflecting the Department's interpretation of the law to be applied on a consistent basis by departmental staff.

With regard to your particular situation, it is the Department's position that contributions of services are not property. Since a gift must involve property, contributions of services, regardless of their nature, do not qualify for a charitable donation tax credit. This position is well established in law and was affirmed by the Tax Court of Canada in the dismissal of your appeal of the reassessment of your XXXXXXXXXX income tax return.

For a contribution of services to qualify for the charitable donation tax credit, a change to the law would be required, which is the responsibility of the Department of Finance. I note that the Prime Minister's office also sent a copy of your August 14, 1999 letter to the Honourable Paul Martin, Minister of Finance, for his consideration.

I trust that this information clarifies the Department's position on this matter.

					Yours sincerely,

					Bill McCloskey
					Assistant Deputy Minister
					Policy and Legislation Branch

Attachment
J. Leigh
952-1505
992451
October 18, 1999