7 March 1991 Income Tax Severed Letter - Gift of Capital Property

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.

Sirs:

Re: Technical Interpretation of Paragraph 118.1(6)(b) of the Income Tax Act (the "Act")

This is in reply to your letter of January 10, 1991 concerning the abovementioned matter. Your letter was referred to us by the Montreal District Taxation Office on February 7, 1991. We apologize for the delay in replying to your request.

You provided us with the following details.

XXX

YOUR QUESTIONS

Paragraph 118.1(6)(b) of the Act states that the prescribed donee must provide "an undertaking, in a form satisfactory to the Minister, to the effect that such property will be held for use in the public interest". You have asked whether a letter from XXX filed with the income tax returns for the year in which the gift of property was made by the United States residents would be a form satisfactory to the Minister.

As mentioned in paragraph 5 above, XXX You query whether this might lead us to conclude that the property is not held in the public interest

OUR COMMENTS

Generally, we do no comment on contemplated transaction as such comments generally must take the form of an advance income tax ruling. We can however make some general comments which might be of assistance to you.

Unlike other charitable donations, those made under 118.1(6)(b) do not require an official receipt be issued. We are of the opinion that a letter from XXX would be sufficient if it contained the following information:

• • the day on which the donation was received;
• • a brief description of the property donated;
• • the name and address of the donor;
• • the name and address of the appraiser if an appraisal was performed; and,
• • a description of the uses to which the property will be put. Specifically, this description should support the contention that the properties will be held in the public interest.

The letter from XXX should be filed with the income tax returns of the US residents and it should bear the signature of an individual duly authorized to receive such gifts on behalf of XXX

To the extent that XXX this might lead us to question whether a gift was made. In Interpretation Bulletin IT-297R, paragraph 1, a gift has been defined as follows:

"A gift may be defined as a voluntary and gratuitous transfer of real or personal property. There must be a donor who gratuitously disposes of the property and there must be a donee who receives the property given. No right, privilege, material benefit or advantage may accrue to the donor or to a person designated by the donor."

In the situation presented, XXX

Lastly, we would like to remind you that where a non-resident disposes of taxable Canadian property, that person must obtain a clearance certificate pursuant to section 116 of the Act, form T2062 can be obtained from your local District Taxation Office for this purpose.

The above comments are general in nature and may not be applicable to a specific fact situation. Further, as mentioned in paragraph 21 of Information Circular IC 70-6R2 [Information Circular 70-6R2] (dated September 28, 1990), the above opinions are not advance income tax rulings, and consequently are not binding on the Department.

We trust the above comments will be of assistance to you.