Dear Sir
Re: Charitable Donations
This is in reply to your fax letter of July 31, 1991 concerning a donation of a
24(1)
Our Comments
The fact situation which you set out relates to a definite contemplated transaction. Assurance as to the tax consequences of contemplated transactions can only be given in response to a request for an advance income tax ruling. If you wish to obtain any binding commitment with respect to an actual case with facts similar to your example, an advance income tax ruling application should be submitted. Information Circular 70-6R2 (see attached) describes the guidelines respecting advance income tax ruling applications. However, we provide the following comments regarding your questions.
A gift, for purposes of sections 110.1 and 118.1 of the Income Tax Act (the Act) is a voluntary transfer of property without valuable consideration. A donation of an interest in 24(1) could be considered a voluntary transfer of property and a Crown gift receipt could be issued for the fair market value of such interest.
24(1)
Where after the donation you present a 24(1) to a donor, by way of gift inter vivos, you would by virtue of subsection 69(1) of the Act be deemed to have received proceeds of disposition therefor equal to the fair market value. In computing your income for the year these deemed proceeds of disposition would be required to be included in your sales for the year.
It would be a question of fact whether a 24(1) presented to a donor sometime after the donation to the Crown of the donor's interest in the additional 24(1) was a gift unrelated to the initial donation or delayed consideration for the initial payment in respect of the purchase from you of the interest in the additional 24(1)
We trust our comments will be of assistance to you.
Yours truly,
for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch