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For deaths that occurred before 2016, the eligible amount of gifts that a deceased person gave in the year of death, including estate donations (donations made by will and designation donations) could be claimed on the deceased’s final return and the return for the preceding year.

For deaths that occur after 2015, estate donations are no longer deemed to be made by an individual immediately before the individual’s death. Instead, these donations are deemed to be made by the individual’s estate and where certain conditions are met, by the individual’s graduated rate estate (GRE).

GRE donations are donations by a graduated rate estate to a qualified donee. The donated property must be property that was acquired by the estate on and as a consequence of the death (or property that was substituted for such property). GRE donations include those made through the will and designation donations.

You can allocate a GRE donation among any of:

• the taxation year of the GRE in which the donation is made,
• an earlier taxation year of the GRE, or
• the last two taxation years of the deceased individual (the final return and the return for the preceding year).

In addition, under proposed changes, for 2016 and future taxation years, a gift made after the 36 month period but within 60 months after the date of death by a former GRE that continues to meet all of the requirements of a GRE except for the 36 month time limit, can be allocated among any of:

• the taxation year of the estate in which the donation is made; or
• the last two taxation years of the deceased individual (the final return and the return for the preceding year).

An estate, whether it is a GRE or not, can claim a charitable donations tax credit for an estate donation in the year in which the donation is made or in any of the five following years (or 10 years for a gift of ecologically sensitive land made after February 10, 2014). However, an estate that is not a GRE or a former GRE (within 60 months of the date of death) cannot allocate a donation made by the estate to a taxation year of the individual or an earlier year of the estate.

Generally, when an individual dies, the individual is deemed to have disposed of all capital property immediately before the individual’s death.

Where the estate of an individual donates property that was the subject of a deemed disposition by the individual immediately before the individual’s death, and the property’s fair market value upon transfer to the qualified donee has changed, the difference will result in a gain or loss to the estate that will generally be recognized for income tax purposes. This will be the case whether or not the donation is a GRE donation or a former GRE donation.

If the property is certified cultural property or ordinarily benefits from a capital gains inclusion rate of zero, see the sections called “Gifts of certified cultural property” and “Capital gains realized on gifts of certain capital property” in Pamphlet P113, Gifts and Income Tax. However, if the property donated:

• is a property that benefits from a capital gains exemption or exclusion when donated as described in the sections of Pamphlet P113 referenced above; and
• where the estate is a GRE and the donation is a GRE donation,

the same treatment will apply to the capital gain on the deemed disposition of the property immediately before the individual’s death. Under proposed changes, this treatment will also apply to former GRE donations.

Additional special rules exist for the proceeds of disposition and cost amount of gifts of art, from the artist’s inventory, on and as a consequence of the artist’s death.