Re: Gift of Life Insurance to a Charity
This is in reply to your letter of April 2, 1991,
24(1)
Our Comments
A gift, including a gift of life insurance premiums, is a voluntary transfer of real or personal property from a donor, who must freely dispose of his or her property, to a donee, who receives the property given. The transaction may not result directly or indirectly in a right, privilege, material benefit or advantage to the donor or to a person designated by the donor.
As you are aware, IT-244R2 deals with the subject of gifting life insurance policies, and, in order for the premiums to be deductible, the registered charity must own the life insurance policy. However, it appears that your group term life insurance policy cannot be assigned or transferred. As explained to you by the Minister of Finance in his letter of February 7, 1991, the beneficiary under a life insurance policy does not have an interest in the policy and the act of naming a beneficiary does not involve a transfer of property. Consequently, there would be no gift of property which could be recognized for income tax purposes.
Interpretation Bulletins are not law, but merely advise the public of Revenue Canada's interpretation of the law as it applies generally. As the conclusion, outlined above, that there would be no gift in these circumstances represents our understanding of the law, rather than an administrative position, it is not possible for the policy change which you seek to be achieved through the amendment of Interpretation Bulletin IT-244R2 without a change in the underlying law. As you know, such a change in the law would be the responsibility of the Minister of Finance.
We regret that we are unable to be of greater assistance to you.
Yours truly,
for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch