1 August 2006 External T.I. 2005-0125431E5 F - Donation rémunératoire et vente à rabais -- summary under Subsection 248(31)

Before finding that a remunerative gift as described in the Civil Code could give rise to a donation tax credit, CRA stated:

2. The new rules in proposed subsection 248(30) of the Act do not create a presumption of a gift where the value of the consideration received by a donor is less than 80% of the value of the property donated but there is otherwise no gift because of the absence of an intention to make a gift. Whether there is a gift is a question … of civil law.

3. Where, in the context of a transfer of property, the general rules of contract and obligation and all the specific conditions of a gift in civil law are satisfied, we are of the view that the gift will generally be considered a gift for the purposes of the Act. In the case of a remunerative gift, proposed subsection 248(31) provides that the eligible amount of the gift is the amount by which the fair market value of the property that is the subject of the gift exceeds the amount of the advantage in respect of the gift.

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