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: Follow-up to 2000-000733. Whether a person can make a gift and transfer the related credit/deduction to a retailer in exchange for a discount.
Position: No
Reasons: Even right to direct is property the amount that a third party is willing to pay the right to transfer (assuming no tax receipt) is likely nominal. Again, charitable credits are not transferable under the Act.
XXXXXXXXXX 2000-001680
April 19, 2000
Dear Sir:
Re: Certifigift - Charitable Tax Certificate Proposal
This is in reply to your letter dated of March 23, 2000 and further to our letter dated February 23, 2000 and our discussion of April 10, 2000.
The income tax result that you hope you achieve with your certifigift proposal is that the person making the direction to have the funds transferred to a registered charity will be entitled to a donation deduction or credit equal to the dollar value of the funds. As we indicated previously, even if it could be argued that by making the direction the person is transferring property, represented by the "used" certifigift, to the charity the person would not be making a gift of the funds actually transferred to the charity since such funds are not property of that person.
The value of the right to direct the transfer of funds would be determined with regard to what an arm's length third party would be willing to pay to acquire that right. As discussed, even if you take the view that the reduction in selling price granted by a retailer as a consequence a customer tendering a certifigift is the cost to the retailer of used certifigift this would not be an indication of the fair market value of the used certifigift after that time. As noted in our February 23rd letter it is our view that this value should be determined on a before tax basis.. While the entitlement to a tax credit or deduction may well be a factor on how much someone gives to a charity, it should not be used as the basis for determining the value of property that is donated.
As requested we spoke with the person at the Department of Finance to whom you had described the certifigift arrangement. We were advised that Finance had not concluded that your intended income tax consequences would be achieved under the provisions of the Income Tax Act. The Department of Finance representative did indicate that at this time the Department is not prepared to consider proposals that would broaden the scope of income tax legislation dealing with charitable giving.
We hope our comments are of assistance in making our position clear with regard to your proposal.
Yours truly,
F. Lee Workman
Manager
Financial Institutions Section
Financial Industries Division
Income Tax Rulings Directorate
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