Section 110.1

Subsection 110.1(1) - Deduction for gifts

Paragraph 110.1(1)(a) - Charitable gifts


Hudson Bay Mining and Smelting Co., Ltd. v. The Queen, 86 DTC 6244, [1986] 1 CTC 484 (FCTD), aff'd 89 DTC 5515 (FCA)

The sale by the taxpayer to the Manitoba Hydro-Electric Board of hydro facilities for what was agreed upon in the negotiations to be a net price of $750,000 was effected by Manitoba Hydro purchasing the assets for $3,600,000 and the taxpayer making a "gift" to Manitoba Hydro of $2,850,000. Since the evidence established that the two payments were interdependent, the $2,850,000 payment could not be said to have been made gratuitously, and was not a "gift".

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 163 - Subsection 163(2) 81

Olympia Floor & Wall Tile (Quebec) Ltd. v. MNR, 70 DTC 6085 (FCTD)

donations deductible as business expenses rather than as gifts

Gifts which the taxpayer made to Jewish organizations in the Montreal area in amounts over $100 were accepted to have been made for the purpose of increasing its sales and, therefore were deductible in computing its income. Jackett P stated (at p. 6089) that he could find "no inherent incompatibility between an ‘outlay…for the purpose of…producing income' and a gift to a charitable organization." Conversely, "even though they took the form of contributions to charitable organizations [they] were not ‘gifts' within the meaning of…section 27(1)(a) [the predecessor of s. 110.1(1)(a)]" (p. 6090).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose donations deductible as business expenses rather than as gifts 92

See Also

Fonds de solidarité des travailleurs du Québec (F.T.Q) v. The Queen, 2018 TCC 3, aff'd on s. 18(1)(a) grounds 2019 CAF 36

consideration for "gift" was elimination of obligation to invest the funds

The appellant was the limited partner of a partnership (“SEC”) that had become insolvent during efforts to relaunch a paper mill close to the City of Chandler. A Plan of Arrangement concluded after the commencement of CCAA proceedings contemplated that the mill would be sold to a corporation (SDEIC) formed by the City. The appellant and other creditors of SEC agreed to lend money to SDEIC to finance cost of acquiring and starting-up the mill. The appellant and other creditors of SDEIC then agreed with SDEIC that in the event of a sale of the mill by SDEIC, any resulting loan repayment proceeds would be invested for priority participating units in an LP to be formed having similar objects to SDEIC (being economic development of the Chandler region).

SDEIC was unsuccessful in relaunching the mill, and two years later agreed to sell it to a third party (“Vantek”). A new agreement was entered into under which the appellant and the other creditors of SDEIC would pay the loan repayment proceeds received by them on the Vantek sale to the City of Chandler and the City would provide charitable receipts therefor.

After having cited Martin v. Dupont, 2016 QCCA 47 at paras. 28-31 for the proposition that for there to be a gift there must be “a transfer of property of a donor to a donee without the donor receiving equivalent consideration in return” and that “the donor must have the actual intention to part with the transferred property for the benefit of the donee without receiving a benefit in return” (para. 37), and in finding (respecting the first test) that the appellant had received consideration equal to the two resulting “gifts” by it to the City of $7.2 million and $2.1 million, Ouimet J stated (at paras. 45-6, TaxInterpretations translation):

When the appellant proposed to SDEIC and the City of Chandler to pay these sums to the City of Chandler, the obligation of the appellant towards SDEIC still existed. This obligation did not cease to exist until the moment that SDEIC and the City of Chandler accepted that these amounts would be paid to the City of Chandler. Effectively, the proposition advanced to SDEIC and the City of Chandler was to pay to the City of Chandler the sums of $7,188,435 and $2,078,922 “in lieu” of investing those amounts in a limited partnership.

Since the payment of the sums … to the City of Chandler had the effect of freeing the appellant of its obligation to negotiate in good faith to create a limited partnership, the consideration received by the appellant in exchange for such payment was the amount by which that obligation was extinguished.

After noting (at para. 51) that Hébert v. Giguère [2003] R.J.Q. 89 found that the “fact that a person is relieved of an obligation constitutes a benefit,” Ouimet J found that the above facts indicated the receipt by the appellant of an advantage such that the second “psychological” test for “gift” also was not satisfied.

Accordingly, the two “gifts” were not deductible under s. 110.1(1)(a).

Words and Phrases
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose purpose of payment was to extricate from a regional economic-development obligation rather than to enhance business reputation 220
Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts payment relieving of a correlative contractual obligation was not a gift 120

Emballages Starflex Inc. v. Agence du revenu du Québec, 2016 QCCA 1856

charitable donations not deductible as business expense

The taxpayer had claimed deductions for donations made to U.S. charities based on a Quebec provision which exempted income for Quebec purposes if it also was exempted under one of Canada's treaties. At the trial's opening, the taxpayer had requested an amendment to its pleadings to claim, in the alternative, that its donations were deductible as business (promotional) expenses, relying on Olympia. In confirming the refusal below to allow this amendment, the Court of Appeal essentially found that Olympia was inconsistent with the Symes approach to statutory interpretation, stating:

The specific tax treatment provided in the TA respecting gifts must prevail similarly to the pronouncements of the Supreme Court in Symes… . The Court specified there that child care expenses could not be deducted as business expenses under the applicable tax principles, in the face of a specific and complete regime for child care expenses provided in section 63 of the Income Tax Act. The same reasoning should be favoured in addressing the treatment of gifts.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose gifts to charities likely cannot be deducted as business expenses 207
Tax Topics - Statutory Interpretation - Specific v. General Provisions charitable gift rules a complete code 144

Pustina v. The Queen, 96 DTC 1594 (TCC)

Mogan TCJ. indicated that if a car dealer donated a new car to a local charity that issued a charitable receipt, the deemed proceeds to the dealer under s. 69(1) would be offset by a charitable deduction.

Administrative Policy

18 November 2003 External T.I. 2003-001469 -

The grant of a stock option by a corporation would not appear to result in a reduction in the granting corporation's assets. This would preclude the grant being viewed as a transfer of property from the corporation to the charity to whom the stock option was granted.

29 January 1997 T.I. 963494

General discussion of the circumstances in which a corporate donation to an Indian band council (which RC recognizes as a Canadian municipality for purposes of s. 110.1(1)(a)(iv)) would qualify for deduction.

6 June 1994 T.I. 933590 (C.T.O. "Corporate Gift of a Life Insurance Policy"

Where a corporation purchases a large whole life insurance policy in respect of one of its key employees and gifts the policy to a charity so that the charity becomes the registered owner of the policy and the beneficiary of the face amount of the policy while the corporation retains the right to any accumulated dividends payable on the policy (and uses the accumulated dividends to the extent available to pay annual premiums), RC will not view the transfer as constituting a gift because of the retention of the right to the accumulated dividends.

9 July 1993 T.I. 930660 (C.T.O. "Whether Corporation can make Donation Rather than Estate"; Tax Window, No. 33, p. 6, ¶2641)

Where a corporation makes a charitable donation in lieu of the estate holding its shares making such donation, the donation by the corporation may not qualify as a "gift".

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) 52

IT-110R2 "Deductible Gifts and Official Donation Receipts"


Alan Steinfeld, Stephen Moverley, "When is a Gift Completed?", All England Legal Opinion, No. 10, July 2001.

Paragraph 110.1(1)(b) - Gifts to Her Majesty

Administrative Policy

ATR-63, 20 April 1995 "Donations to Agents of the Crown"

In the absence of a specific provision to this effect in an organization's enabling legislation, RC required an opinion from the Deputy Attorney General of the province that the organization was a Crown agent.

Although decisions regarding specific beneficiaries must be the exclusive responsibility of the entity to which the donations are made (in this case, the organization), here "the direction that the donations be used for particular purposes was not binding and was in such general terms that it was clear that the exclusive responsibility regarding the use of the funds remained with the organization".

20 January 1995 External T.I. 5-950041 -

Given that s. 53 of the College and Institute Act, R.S.B.C. 1979, c. 53 provided that an institution was for all its purposes an agent of the Crown in right of the Province, a gift to a college designated as a provincial institute under that Act qualified as a gift to the provincial Crown.

16 December 1992 T.I. 923559 (C.T.O. "Crown Gifts to Agents of Her Majesty")

A gift to a foundation established under the University Foundation Act (Ontario) qualifies as a gift to an agent of the provincial Crown.

Paragraph 110.1(1)(d)

Administrative Policy

4 April 2016 Internal T.I. 2016-0625241I7 F - Application of section 207.31

tax on subsequent disposition irrespective of deduction claimed

Respecting a proposed disposition of ecologically sensitive land by a municipality without authorization of the Minister of the Environment, which previously had been donated to it under the s. 110.1 ecological gift rules, CRA confirmed that the s. 207.31 tax would apply even if the (corporate) donor had not claimed a s. 110(1)(d) deduction for the gift, stating that s. 207.31’s purpose is “to ensure the long term protection of ecologically sensitive land.”

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 207.31 tax on sales of ecological lands applies even if no deduction was claimed 124

Subparagraph 110.1(1)(d)(iii)

See Also

Yellow Point Lodge Ltd. v. The Queen, 2019 TCC 178

ecological gift "was made" in the year before it was certified as such

In 2008, the taxpayer (“Yellow Point”) donated a covenant on ecologically sensitive land to two qualified donees described in s. 110.1(1)(d)(iii)(D), and received a certification of the value of the land (from the Minister of the Environment) and a certificate that the lands were ecologically sensitive from the Minister of National Revenue, in late 2009. The taxpayer did not generate sufficient taxable income in its 2008 to 2013 taxation years to fully utilize the amount of the donation, and made a further claim in 2014. It submitted that the gift was not made until 2009 “when all of the preconditions to making an ecological gift were completed (i.e., when the Minister of the Environment issued the Certificates in December 2009)” (para. 16).

In rejecting that submission, Visser J stated (at paras 25, 26, 27, 29, 31, 34, 36):

… [E]ach of the criteria set out in paragraph 110.1(1)(d) are separate, and in particular … they are not part of the determination of when a gift has been made, which in my view occurs when a donor legally effects a voluntary transfer of property to a donee … .

… [T]he certificates are necessary to claim a deduction under paragraph 110.1(1)(d) of the Act, but not to determine if a gift of land has been “made” for the purpose of paragraph 110.1(1)(d).

This conclusion was supported by various provisions which treated “the issuance of the certificate by the Minister of the Environment is separate from, and is subsequent to, the making of the gift” (at paras. 27, 29, 31, 34, 36).

Subsection 110.1(15)

Administrative Policy

31 March 2017 External T.I. 2016-0630351E5 - Return of a gift

return of gift made 35 years previously by charity

An individual gifted a whole life insurance policy to a charitable university foundation on condition that the funds be used in a specific program, which has now been discontinued, so that the donor now wants his gift back. CRA noted that generally gifted property becomes the absolute property of the donee, so that now returning a gift to the donor could result in the foundation being “regarded as making a gift to a non-qualified donee or providing an undue benefit, which are contraventions of the Act and could result in sanctions that include revocation of registered status.” However, if “the gift of the life insurance policy to the foundation was subject to a condition subsequent,” then apparently these adverse consequences would not attend a return of the gift. CRA did not provide any guidance on this point, stating that it was a question of non-tax law.

CRA indicated that if the gift was returned, then s. 118.1(26) (similar to s. 110.1(15)) would reverse the tax benefit to the donor from the donation in the year it was made - although CRA did not dwell on the fact that the gift was made in 1981. There is an ambiguity in the coming into force language for s. 118.1(26), which applies to transfers of property occurring after March 21, 2011, without specifying whether this is referencing the original transfer or the transfer back. Furthermore, s. 118.1(28) (similar to s. 110.1(17)) provides that if s. 118.1(26) applies respecting a transfer of property to an individual, CRA may reassess a return of any person to the extent that the reassessment can resonably be regarded as relating to the transfer. CRA did not discuss whether technically the individual's 1981 return could be reassessed under s. 118.1(28).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(26) return of gift made 35 years ago 277
Tax Topics - Income Tax Act - Section 149.1 - Subsection 149.1(1) - Charitable Foundation gift potentially could be returned by charity pursuant to a condition subsequent 161

Subsection 110.1(6)

Administrative Policy

7 October 2019 Internal T.I. 2019-0801871I7 - Loanbacks

there can be multiple counting of loans for purposes of reducing a gift amount under ss. 118.1(16) and 110.1(6)

A private foundation makes interest-bearing loans to multiple corporations not dealing at arm’s length with each other. Within 60 months thereafter, the corporations make gifts to the foundation and the loans are also repaid within 60 months. CRA found that under s. 118.1(16) (which is made applicable to gifts by corporations by virtue of s. 110.1(6)) the amount of the gift by each corporation is reduced by the aggregate amount of the loans, notwithstanding that the loans are fully repaid.

CRA also found that ss. 118.1(16) and 110.1(6) applied (apparently with the same double-counting issue) in essentially the reverse situation of a corporation making a gift to a private foundation and making loans within 60 months thereafter to both that corporation and a person with whom that corporation did not deal at arm’s length.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(16) each gift is reduced by the aggregate NAL loans 384