A J Frost:
1 The appellant's notice of appeal from a notice of reassessment dated June 14, 1973 in respect of the 1972 taxation year objected to the disallowance by the Minister of National Revenue of the following charitable donations claimed as deductions:
Foundation of Alberta Mennonites $400.00
Tabor College, Hillsboro, Kansas, USA 214.20
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$614.202 At the opening of the hearing, counsel for the appellant informed the Board that the part of the appeal concerning the $400 paid to the Foundation of Alberta Mennonites had been withdrawn. This appeal therefore only deals with a payment of $214.20 to Centennial Life Insurance Company of Pittsburg, Kansas (hereinafter referred to as “Centennial”) that the appellant claimed as a charitable donation, the benefits of which flowed indirectly to Tabor College, and which the Minister had disallowed on the ground that the amount claimed was not a deductible gift to a university within the meaning of subparagraph 110(1)(a)(vi) of the Income Tax Act, SC 1970–71–72, c 63 as amended.
3 The evidence clearly established the following facts:(1) that the $214.20 paid by the appellant to Centennial was in the nature of a charitable donation to Tabor College;
(2) that Tabor College is a university situate outside Canada, the student body of which ordinarily includes Canadian students;
(3) that the appellant, at the request of Tabor College, chose to benefit that institution by taking out a 20-pay life participating policy on the life of his daughter;
(4) that Tabor College was the absolute owner and beneficiary of the said policy with no rights reserved to the appellant;
(5) that, if the premium payments had been made out to Tabor College and endorsed over by the university officials to Centennial Life Insurance Company, it would have made no difference to the appellant, Tabor College or the insurance company; and
(6) that the arrangement Tabor College had with Centennial was a plan devised to assist Tabor College with its endowment program and, before the plan was entered into, the question of the deductibility for income tax purposes of the premiums as payments to a charitable organization in the United States had been considered in the light of the United States tax laws but not the laws of Canada.
4 Under paragraph 110(1)(a) of the new Income Tax Act various kinds of gifts are allowed as deductions in computing taxable income, including charitable donations to universities outside Canada whose student bodies ordinarily include students from Canada. Tabor College qualified as such an institution, but the appellant did not make his payment directly to Tabor College but to Centennial as agent for Tabor College. Counsel for the respondent, in his argument, said there was “no doubt a gifting of a policy” but submitted that the actual premiums paid to Centennial were not a gift within the meaning of paragraph 110(1)(a). The Board appreciates the difficulty of a literal interpretation of this section, but holds that the net benefits which flow exclusively to Tabor College from year to year under the assigned policy constitute a gift to Tabor College as absolute owner of the policy. In respect of the 1972 taxation year, the appellant is entitled to claim as a gift to Tabor College the cash surrender value of the policy, if any.
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