5-913265
Dear Sirs:
Re: 24(1)and Prospective Donation
We are writing in reply to your letter of November 21, 1991 wherein you requested our comments as to whether the could be designated as a Crown Agency Foundation.
Our understanding of the facts is as follows:
24(1)
You understand that if this money is given to the Crown and should the Crown give it back to the hospital immediately it would achieve the result which you wish. You question whether the 24(1) could be designated as a Crown Agency Foundation to obtain this result.
Our Comments
Whether or not a donation, such as the one described above, could be considered to be a gift to Her Majesty in right of a province would involve a finding of both fact and law.
If an acceptable donation is made directly to Her Majesty in right of a province, which would be evidenced by a receipt issued by an appropriately authorized official of the provincial government, it is included in "total Crown gifts" as defined in subsection 118.1(1) of the Income Tax Act and would be deductible in total in the year in which it is given. Also, paragraph 7 of IT 297R2, (copy attached) states that:
"Gifts to Her Majesty in right of Canada and Her Majesty in right of the provinces include gifts to an agent of the Crown. Whether a particular entity is an agent of the Crown in right of Canada or a province depends on whether the law creating the entity (a corporation, commission, gallery, etc.) expressly makes it an agent of the Crown or the entity is an agent of the Crown at common law."
Where the statutory language, in this case the Public Hospitals Act, Ontario, is unclear as to whether or not a particular entity is an agent of the Crown, we will accept the opinion of the Attorney General of the Province that the particular entity is an agent of the Crown at common law. Generally this opinion would be to the effect that the Board of Directors of 24(1) acts as agent for Her Majesty in right of Ontario.
In situations where a donor directs that a particular cash donation be used for a designated specific purpose of purposes, such that the province does not have an unfettered right to use the money, it is our view that the donation fails to meet the basic definition of a gift as described in paragraph 3 of IT 110R2 (copy attached). However, it is the Department's practice to view such donations as acceptable provided that no benefit accrues to the donor and the designated gift does not benefit any person not dealing at arm's length with the donor.
We trust that these comments will be of assistance.
Yours truly,
E. Wheeler for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch