23 January 1997 External T.I. 9641855 - 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: income or gift

Position:q of f

Reasons:need to review agreements etc

		964185
XXXXXXXXXX	S.J. Tevlin

Attention: XXXXXXXXXX

January 23, 1997

Dear Sirs:

Re: Tax Opinion Request

We are writing in response to your letter of November 18, 1996 wherein you asked for our opinion with respect to a completed transaction.

Pursuant to the commentary in paragraph 22 of Information Circular 70-6R3 dated December 30, 1996 ("IC-70-6R3"), we are unable to provide any opinion in respect of the specific completed transaction described in your letter.

However, we have set out some general comments which may be of some assistance.

Under common law, a bona fide gift is a voluntary transfer of real or personal property from a donor, who must freely dispose of his or her property, to a donee, who receives the property given. Therefore, 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 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.

Paragraph 4 of Interpretation Bulletin IT-334R2 gives the following explanation concerning "Gifts and Other Voluntary Payments":

"Amounts received as gifts, that is, voluntary transfers of real or personal property without consideration, are not subject to tax in the hands of the recipient. However, when by virtue of an office or employment a voluntary payment or other valuable transfer or benefit is received by an employee from an employer, or from some other person, the amount of the payment or the value of the transfer or benefit is generally included in income pursuant to subsection 5(1) or paragraph 6(1)(a). .... Similarly, voluntary payment (or other transfers or benefits) received by virtue of a profession or by virtue of carrying on a business are taxable receipts."

"Employment" is defined in subsection 248(1) of the Act to mean "the position of an individual in the service of some other person ... and "servant" and "employee" means a person holding such a position".

We also refer you to Interpretation Bulletin IT-508R entitled "Death Benefits".

The foregoing comments are given in accordance with the practice referred to in paragraph 22 of IC-70-6R3 and are not binding on Revenue Canada, Taxation.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch