The estate of Mr. X, who died on January 15, 2016, and which makes a charitable donation on February 15, 2017, meets all of the requirements to be a graduated rate estate (“GRE”), except that it does not meet the requirements in paras. (c) and (d) of the GRE definition solely due to it not having filed its return of income for its first taxation year until thereafter (on April 1, 2017). Can this donation be treated as a GRE donation and claimed in the deceased’s final return? CRA responded:
[T]he wording of the Act does not prevent a donation to which subsection 118.1(5.1) will apply from being made by an estate prior to its filing of its return of income for its first taxation year.
Accordingly…as long as the estate of Mr. X meets all of the requirements in the GRE definition at the time of the filing of its first return of income on April 1, 2017, subsection 118.1(5.1) will apply to the donation if the requirements contained therein are met. In that case, the eligible amount of the donation can be claimed in the deceased’s return of income for the year of death or the immediately preceding year, or in the GRE’s return of income for the year of the donation or the previous year of the GRE. Any unused donation amount can be carried forward from the year in which the donation is made and claimed by the GRE within the limits in the Act.