2 March 1999 Income Tax Severed Letter 9903286 - CHARITABLE GIFTS

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: Is a portion of an admission fee paid to attend a XXXXXXXXXX considered a charitable gift for the purposes of sections 110.1 and 118.1?

Position: Question of fact but likely no based on information we have at this time.

Reasons: Payments do not appear to meet the accepted definition of gift. May not be voluntary and consideration is received in return.

		March 2, 1999

	HEADQUARTERS	HEADQUARTERS
	Charities Division	Financial Industries
		  Division
	Attention:  Carl Juneau	Michael Cooke
	                Assistant Director	(613) 957-3498

		990328

XXXXXXXXXX

This is in reply to your memorandum dated February 4, 1999 wherein you requested our views as to whether a portion of an admission fee paid by a person to attend a XXXXXXXXXX is considered to be a charitable gift for the purposes of sections 110.1 and 118.1 of the Income Tax Act (the "Act").

Based on our discussion with Frank Fotia of the Charities Division (Cooke/Fotia - February 22, 1999) and the information contained in your above noted memorandum we understand the following:

XXXXXXXXXX

Comments:

Paragraph 5 of IT-110R3 describes the Department's general views as to when we will consider that a portion of an admission price, fee or other amount paid by a person to attend or participate in a fund raising event for a registered charity will represent a gift for the purposes of the Act. However, the determination as to whether a gift exists or not for the purposes of sections 110.1 and 118.1 of the Act remains a question of fact that must be determined on a case by case basis.

For a gift to exist a donor must voluntary transfer property to a donee without expectation of any valuable consideration or benefit in return (express or implied). In the context of making a gift to a registered charity one would ordinarily expect that both the donor and donee would be aware that the transfer of property by the donor to the donee charity would be for the express purpose of making a gift (i.e., intent). It also appears that for a gift to exist its amount or value must ordinarily be clearly ascertainable.

As noted above, where a person pays an amount to a registered charity for goods and services whether a portion of the amount paid will be considered as a gift (the "gift portion") to the registered charity is a question of fact. However, in situations where goods and/or services are provided by a registered charity, while not determinative in of itself, no gift can be said to exist unless it is clearly understood by all parties that a portion of the price paid will represent a gift. Further, where valuation of the gift portion cannot otherwise be clearly established if the goods and services purchased by the person cannot otherwise be acquired from the registered charity without that person being required to pay the gift portion it is our view that no gift has taken place since there has been no voluntary transfer of property by the person without consideration or benefit.

The problem in our present situation is establishing each particular person's intent (of making a gift) and the amount or value of each gift, if any. However it is our view that no part of the price for the XXXXXXXXXX would represent a gift for the purposes of sections 110.1 and 118.1 of the Act if the person purchasing the XXXXXXXXXX was not aware that XXXXXXXXXX would be issuing a charitable donation receipt for a portion of the price paid (the "gift portion") and if it was not possible for that person to purchase that XXXXXXXXXX without paying the gift portion.

We trust the above comments will be of assistance and if you have any comments or would like to discuss the matter further please do not hesitate to contact either F. Lee Workman at 957-3497 or Michael Cooke.

F. Lee Workman
Manager
Financial Institutions Section
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate