21 May 2003 Internal T.I. 2003-0016297 - SPLIT-RECEIPTING TUITION FEES

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 CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: Under the proposed gifting legislation, can a tax receipt be issued when parents pay an amount for the right for their children to attend a private school?

Position: Provided general comments only.

Reasons: Unable to provide definitive comments due to insufficient information.

Institute of Chartered Accountants of Alberta/CCRA Roundtable
May 22, 2003

Question 13

Some private K-12 schools utilize a "creative" formula for the amounts that parents pay for the right for their children to attend such schools and have issued charitable donation receipts for a portion of the amounts that are paid by parents. Given the proposed gifting legislation released on December 20, 2002, could the CCRA comment on the ability of such schools to now issue charitable donation receipts when parents pay amounts to the school in return for the right for their children to attend?

CCRA's Response

Proposed subsections 248(30) to (33) contain new rules in determining whether a transfer of property to a qualified donee results in a gift for tax purposes where an "advantage" is provided to the donor. Pursuant to proposed subsection 248(30), the eligible amount of a gift is the excess of the fair market value of the property transferred to a qualified donee over the amount of the advantage provided to a donor. Proposed subsection 248(31) provides that the amount of the advantage is generally the value of any property, service, compensation or other benefit received or obtained by the donor as partial consideration for, or in gratitude for, the gift. Given that donative intent must be present for there to be a gift, proposed subsection 248(32) presumes donative intent to exist when the amount of the advantage does not exceed 80% of the fair market value of the transferred property.

Without knowing the full details of the "creative" formula and the schools involved, we are not in a position to provide definitive comments on whether the schools are entitled to issue tax receipts under the current legislation or the proposed gifting legislation. However, in applying the proposed gifting legislation to the situation described, the advantage provided to the parents would include the right for their children to attend the particular school. If the amount of the advantage provided does not exceed 80% of the payment made by the parents to the school and provided that the school is a qualified donee, a tax receipt may be issued for the eligible amount of the gift. We note that the school must be able to support the basis for the determination of the amount of the advantage provided by the school which would otherwise be assumed to be the amount paid by the parents to the school.