| 19(1) | File No. 5-8419 |
| J.D. Jones | |
| (613) 957-2104 |
September 26, 1989
Dear Sirs:
Re: Subsection 118.1(6) of the Income Tax Act (the "Act")
This is in reply to your letter of July 25, 1989, wherein you requested a technical interpretation of subsection 118.1(6) of the Act.
You have asked for our opinion on the application of subsection 118.1(6) of the Act in the following situation. A taxpayer plans to leave capital property under his will to his executors with instructions to pay to his spouse the income from the property during her lifetime and, on his spouse's death, the property is to pass to a registered charity.
It is our view that the executors of the deceased taxpayer's estate may be able to make use of the provisions of subsection 118.1(6) of the Act on behalf of the deceased taxpayer; however, the executors would do so at the time of the taxpayer's death and not at the time of the deceased taxpayer's wife's death. As the taxpayer makes the gift to the registered charity by his will, the relevant tax credit may be claimed by the testator in computing his tax payable for his taxation year ending on his death under subsection 118.1(3) of the Act as subsection 118.1(5) deems him to have made the gift in that taxation year.
The Department would only consider a gift to have been made in the above circumstances where the fair market value of the gift is readily ascertainable as outlined in IT-226 and where the will does not contain discretionary powers to the wife for capital encroachment.
We trust our comments will be of assistance.
Yours truly,
for DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch