22 August 1990 Income Tax Severed Letter ACC9285 - Gifts Qualifying as Charitable Donations

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.

C. Tremblay
                                        (613) 952-1361

24(1)

Attention: 19(1)

August 22, 1990

Dear Sirs:

This is in reply to your letter of July 23, 1990, concerning your
request for a ruling.  You seek our views as to     24(1)     .As
advanced income tax rulings are only given in respect of proposed
transactions subject to the guidelines in Information Circular IC
70-6R (a copy is enclosed for your information), we can only
provide you with some general comments.

24(1)

OUR COMMENTS

A gift is a voluntary and gratuitous transfer of real or personal property without consideration. No right, privilege, material benefit or advantage may accrue to the donor or to the person designated by the donor.

In order for the "gift" to qualify as a charitable donation, it must be made entirely separate and unrelated to any subsequent use. Decisions regarding specific beneficiaries of its established programs must be the exclusive responsibility of the charity.

In determining whether the     24(1)     should issue a receipt in
respect of a contribution by an individual staff member, the
following guidelines should be considered:

     - Amounts should be paid to the     24(1)     and must be    
       unconditional.

     - Any designated purpose should be part of the general       
       activities   of the     24(1)     for which donations would 
       normally be accepted.

     - Generally, individuals who have made such contributions and 
       who wish to propose that     24(1)     funds be expended on 
       particular activities should submit applications for funds 
       or equipment to a committee responsible for administering  
       such funds or equipment for the particular activities.

- Such an application should adequately document the proposed use of the funds or equipment.

- Funds or equipment should only be allocated to the individual or his department after applying the standard evaluation criteria for such allocation.

      - Any equipment purchased or expenditures made with         
        contributed funds must be of such a nature that it would  
        be reasonable for the     24(1)     to acquire such       
        equipment or expend such funds and the usual controls with
        respect to the use of     24(1)      equipment or         
        expenditure of     24(1)     funds should be in force.

      - There can be no direct connection between the amount of the 
        individual's contribution and disbursement from the fund or 
        allocations of equipment to that person, nor should there 
        be any option to purchase equipment acquired with the funds 
        at the end  of a certain time period.

As is evident from these remarks, for the contribution by a staff member to be a "gift" for income tax purposes, it is important that the contribution not be dependant upon the subsequent acquisition of equipment for the use of the staff member. Whether two transactions are dependant upon each other is a question of fact.

24(1)

We trust our comments are of assistance.

Yours truly,

E.M. Wheeler for Director Business and General Division Rulings Directorate Legislative and Intergovernmental Affairs Branch