The will of Mr. Donor provided for a gift of his life insurance policy on the life of his daughter (which was originally intended to be transferred to his daughter, but this became inappropriate) to a private foundation (the “Private Foundation”). This gift was made by his estate (a graduated rate estate) within three years of his death. Could the GRE claim a gift of $500,000 in his terminal return (assuming sufficient income)? If the Private Foundation was currently designated as contingent policyholder, so that on his death there would be an automatic transfer of the policy to it, would a different result obtain?
After finding, under the first alternative, that “the tax credit for charitable gifts could be claimed in Mr. Donor's final return,” CRA stated:
As to whether the gift could be included in the "total charitable gifts" under clause (c)(i)(A) of that definition under subsection 118.1, it would be necessary to determine whether such a transfer would constitute a gift under the applicable private law, and at what point in time any such donation would be made under the applicable private law. This issue is a private law matter in respect of which the CRA will not provide an interpretation.