Dear Sirs:
Re: Gifts of Rental Properties Sections 110.1 and 118.1 of the Income Tax Act
We are replying to your letter of January 17, 1991 wherein you requested our views regarding the application of the above sections to the hypothetical situations described in your letter. We refer also to our telephone conversation (Larochelle 19(1) of March 25, 1991.
It would appear that you have a specific situation in mind relating to a proposed transaction. Confirmation of the tax consequences of specific proposed transactions will only be provided in response to a request for an advance income tax ruling. As you are aware, the procedure for requesting an advance ruling is fully described in the recently revised Information Circular IC 70-6R2. We can, however offer the following general comments with respect to your enquiry.
Our Comments
As explained to you in our recent telephone conversation
24(1)
If you will refer to paragraph 3 of Interpretation Bulletin IT-110R2 you will note that certain conditions must be present in order for a donation to be eligible for the credit against tax. We would particularly draw your attention to the third precondition, the transfer must occur without consideration or benefit accruing to the donor or to anyone designated by the donor. A gift for tax purposes must be an outright gift with no conditions upon receipt, no right, privilege, material benefit or advantage may accrue to the donor or to a person designate by him
24(1)
Furthermore 24(1)
section 149.1(2)states that the Minister may revoke the registration of a charitable organization where it carries a business that is not a related business of that charity. It would be a question of fact whether 24(1)
The forgoing represents our general views with respect to the subject matter of your letter, however, the facts of a particular situation may result in a different conclusion. As indicated, these opinions are not rulings and in accordance with the guidelines set forth in Information Circular 70-6R2 they are not binding on the Department.
We trust this information will be of assistance to you.
Yours truly,
for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch