23 February 1990 Ministerial Letter 59488 F - Donation of Debt

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.

February 23, 1990

Dear Sirs:

Re:  Donation of Debt

This is in reply to your letter of January 24, 1990 concerning the tax implications of the donation to a charitable organization of outstanding debt by Canadian institutions holding the debt.

You indicate that your letter is a follow-up to an informal fax sent to Mr. Gordon Murray of the Charities Division.  As you know, Mr. Murray referred your letter to this Division in January.  We have just recently sent him our reply which stated our view that a donation of debt could, depending on the circumstances, be viewed as a gift and result in the issuance of a charitable donation receipt by the recipient charity.

We cautioned, however, that the main problem faced by charities in these circumstances would be that of valuing the gifted debt. We also noted the potential application of subparagraph 69(1)(b)(ii) of the Income Tax Act with respect to the disposition of the debt by the donor. 

If you have a particular fact situation in mind you may wish to refer it to Mr. Murray for his comments as he should now be in receipt of our memorandum covering this matter.

We trust this is the information you require.

Yours truly,

for DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch