30 August 2010 External T.I. 2010-0372311E5 - Charitable gifts involving tax shelters

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.

Position: General comments provided.

Reasons: In accordance with our position in IC-70-6-R5, rulings are not provided where all the relevant facts cannot be stated prior to the date of the transactions described in the ruling. When those transactions involve marketed tax shelters with numerous potential purchasers, it is not always possible to know enough about the valuations of the properties or about the intentions of the purchasers.

XXXXXXXXXX
2010-037231 P. Waugh

August 30, 2010

Dear XXXXXXXXXX :

Re: Tax shelter issues

I am writing in response to your email dated June 28, 2010 (file reference 2010-037231) concerning recapture of capital cost allowance on property donated to a registered charity and your email of June 29, 2010 (file reference 2010-037264) regarding capital gains in connection with a gift to a registered charity. In the situations you described, you are considering investing in two separate tax shelters where property will be donated to a registered charity resulting in substantial tax benefits. You have enquired on the capital gains implications and recapture of capital cost allowance for these donations.

As noted in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002, when a request for a technical interpretation relates to a specific proposed transaction, an advance income tax ruling rather than a technical interpretation must be requested. This Information Circular and other CRA publications can be accessed on the Internet at http://www.cra-arc.gc.ca.

Since your issue involves a proposed transaction, the matter should be determined in the context of an advance tax ruling, and not in a technical interpretation. However, a ruling is useful only when all the relevant facts can be stated prior to the date of the transactions described in the ruling. When those transactions involve marketed tax shelters as described in your correspondence with numerous potential purchasers, a response is generally not given since it is not always possible to know enough about the valuations of the properties, or about the intentions of all the purchasers. As noted in Information Circular 70-6R5, the CRA is under no obligation to issue an advance income tax ruling when the transaction is to be completed at some indefinite future time or where all the pertinent facts cannot be established at the time of the request for the ruling.

The following Interpretation Bulletins may provide general information on the issues you have raised: IT-478R2, Capital Cost Allowance - Recapture and Terminal Loss;
IT-288R2, Gifts of Capital Properties to a Charity and Others; and IT226R, Gift to a charity of a residual interest in real property or an equitable interest in a trust.

I regret that I am unable to provide more information.

Yours truly,

Randy Hewlett
Manager
for Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch