Principal Issues: [TaxInterpretations translation] Does a gift of shares qualify as a gift by will for purposes of subsection 118.1(5)?
Position: It's a question of fact.
Reasons: The will and applicable private law must be taken into account.
FINANCIAL STRATEGIES AND FINANCIAL INSTRUMENTS ROUNDTABLE-- 2010 APFF CONFERENCE
Question 3 – Gift of shares by will
Could a gift of shares qualify as a gift by will for the purposes of subsection 118.1(5) where the will is written in such a way that it is the shares with an unrealized capital gain which are donated to a registered charity so as to access the exemption under paragraph 38(a.1), if the amount of the gift is directed to be determined in such a way as to eliminate the taxes of the deceased?
Would your answer be the same if the will provides that the amount of the gift must be determined so as to eliminate the deceased's taxes on the capital gain on those shares only?
CRA Response
Whether or not a gift has been made by will is a mixed question of law and fact that must be resolved in light of all the relevant facts. In particular, the terms of the will and applicable private law must be taken into account. In addition, the will must require the executor or the deceased's legal representative to distribute the bequeathed property to the designated legatee.
The CRA is also of the view that a gift the amount of which is left to the discretion of the executor or the deceased's legal representative is not a gift made by will. In addition, where the amount of the gift cannot be determined, no donation deduction will be allowed in respect of the gift.
Michel Lambert
(613) 957-8968
October 8, 2010
2010-037049.