| August 10, 1990 | |
| Barbara Darling | Business and General |
| Director General | Division |
| Registration Directorate | Bill Guglich |
| 957-2102 | |
| J. Skelton | |
| 900883 | |
| EACC9331 |
Subject: 24(1) Gifts of Rental Properties
This is in reply to your memorandum of May 22, 1990 concerning the status of 24(1) a registered charity, for purposes of paragraphs 149.1(4)(a) and (d) of the Act.
We understand that 24(1)
23 As for judicial consideration of the meaning of the word "incurred", Mr. Justice Lacourciere in R. v. Allan, 45 C.C.C. (2nd) 524 at p. 529 commented that:
The Shorter Oxford English Dictionary, 3rd ed., defines the word "incur" as meaning "to render oneself liable to...; to bring upon oneself". The definition of "incur" found in Webster's Third International Dictionary includes the following: "becomes liable or subject to; bring upon oneself". I rely upon these definitions and treat the word "incur" in section 35 of the Interpretation Act as being synonymous with "liable to" or "subject to".
In was held in Hasson v. Hammel (1977) O.R. (2nd) 517 (Co. Ct.) that "expenses are not 'incurred' unless there is some legal liability to pay them", while in Pickle Crow Gold Mines Ltd. v. M.N.R. 55 DTC 1001, Mr. Justice Cameron at p. 1003, expressed the view that:
...the words "expenses incurred by the taxpayer" have a natural and ordinary meaning of expenses either paid out by the taxpayer or which he has become liable to pay.
24(1) It is not necessary to consider the application of paragraph 149.1(4)(a). In general we would agree with your understanding of the business issue, however there are cases (e.g. Cadboro Bay Holdings, 77 DTC 5115) in which the principal activity consisted only of owning and renting out a single building. In any event it is question of fact whether a private foundation "carries on a business". 24(1)
It also appears that the establishment of a trust would not circumvent 19(1) difficulties. 23
B.W. DathDirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch