November 20, 1987
Mr. Werner Heiss Senior Counsel Office of Legal Services National Capital Commission Department of Justice 161 Laurier Avenue West Ottawa, Ontario K1P 6J6
Small Business and General Division R. Langevin 957-2138
Dear Mr. Heiss:
Re: National Capital Development Program -----------------------------------------
This is in reply to your letter dated November 16, 1987 in respect of the above-captioned matter and requesting our technical interpretation as to the application of the Income Tax Act (the "Act") in the following circumstances.
FACTS: -----
1) the National Capital Commission (the "Commission") is a corporation established by section 3 of the National Capital Act;
2) the Commission is declared under section 4 of the National Capital Act to be for all purposes of that Act an agent of Her Majesty;
3) the objects and purposes of the Commission in accordance with section 10 of the National Capital Act are to prepare plans for an assist in the development, conservation and improvement of the National Capital Region in order that the nature and character of the seat of the Government may be in accordance with its national significance;
4) the Commission is authorized under section 10 of the National Capital Act for the purposes of the Act, among other things, to construct, maintain and operate parks, squares, highways, parkways, bridges, buildings and any other works; maintain and improve any property of the Commission or any other property under the control and management of a department, division or branch of the Government of Canada, including any board, or corporation or other body being an agent of Her Majesty in right of Canada; cooperate or engage in joint projects with, or make grants to local municipalities or other authorities for the improvement, development or maintenance of property;
5) the Commission is authorized under section 20 of the National Capital Act to accept any property by way of gift, bequest or device;
6) the Commission is deemed under section 21 of the National Capital Act to be, for the purposes of the Act, a registered charity within the meaning of that expression for the purposes of that Act;
7) the Commission will invite by public invitation to be issued November 26, 1987, any person, including a corporation, group, body or organization to sponsor the placement, construction or erection along a route extending through the National Capital to be known as Confederation Boulevard certain items including trees, benches, waste baskets, bollards, information kiosks, lighting fixtures and paving stones (collectively referred to as "street furniture"), each for a specific amount, all as set out in the order Form and certain projects as outlined in the National Capital Development Program Catalogue;
8) any person, including a corporation, group, body or organization that may wish to become a sponsor of any street furniture, will be requested to complete an order form and to submit such form for acceptance to the Commission together with a cheque or an authorization to process payment through a specified credit card for the amount specified on the order form in respect of the item requested to be sponsored;
9) the Commission will enter into a written agreement (the "sponsor agreement") with any person, including a corporation, group, body or organization that wishes to become a sponsor of any project, other than street furniture, as outlined in the National Capital Development Program Catalogue. The Commission will agree under the Sponsor Agreement with the sponsor to place, construct or erect the project by a specified date; to maintain the project in good repair for a specified period and to name or identify the project by a name that is mutually acceptable. The Commission will retain responsibility for the design of the project. The sponsor will agree under the Sponsor Agreement to pay the cost of the placement, construction or erection of the project or a specified amount estimated to be that cost and to pay such amount in accordance with a specified schedule;
10) upon acceptance of the request for sponsorship and the receipt of the amount specified in respect of that sponsorship by the Commission, a certificate will be issued to the sponsor by the Commission acknowledging the sponsorship and the specific item sponsored;
11) a map will be given by the Commission to the sponsor showing the location of the item sponsored.
12) the Commission will place on or within the vicinity of each item, other than paving stones, a marker, plaque or label identifying the sponsor by name and the sponsor's residence by city or town and by province or territory.
OPINIONS REQUESTED: ------------------
A) the amount paid to the Commission by a taxpayer, as a sponsor, in respect of street furniture is a gift made by the taxpayer for the purposes of subsection 110(1) of the Act;
B) the amount paid to the Commission by a taxpayer, as a sponsor, in respect of street furniture is a gift made by the taxpayer to Her Majesty in right of Canada for the purposes of paragraph 110(1)(b) of the Act;
C) the amount paid to the Commission by a taxpayer, as a sponsor, in respect of a project, other than street furniture, listed in the National Capital Development Program Catalogue pursuant to an agreement that provides for the placement, construction or erection of the project by the Commission, the naming or identifying of the project by a name acceptable to the taxpayer and the Commission, the identification of the sponsor by the placement or attachment on or in the vicinity of the project of a marker, plaque or label and the maintenance of the project by the Commission, or for any of the foregoing, is a gift made by the taxpayer for the purposes of subsection 110(1) of the Act;
D) the amount paid to the Commission by a taxpayer, as a sponsor, in respect of a project, other than street furniture, listed in the National Capital Development Program Catalogue pursuant to an agreement is a gift made by the taxpayer to Her Majesty in right of Canada for the purposes of paragraph 110(1)(b) of the Act.
Comments on A) above ---------------------
It is our view that whether or not a gift has been made for the purposes of the Act is a question of fact to be resolved on the merits of each case. As a general rule, a gift, for the purposes of subsection 110(1) of the Act, is a voluntary transfer of property without valuable consideration. The principle that no benefit of any kind whatever may be made available to a donor does not, however, include items of little or no value transferred to a donor as a token of appreciation.
Accordingly, we confirm that the issuance of sponsor certificates, maps indicating the location of items sponsored to donors or markers identifying a sponsor's name, city or town, province or territory, as described in the National Capital Development Program Order Form would not be viewed as the receipt by a donor of valuable consideration. Thus, where the tokens of appreciation given back to donors are limited to those described above, such donations would receive the treatment normally given to charitable gifts for the purposes of the Act.
Comments on B) above: ---------------------
It is a canon of statutory interpretation that if provisions in different statutes are in irreconcilable conflict, the Courts can conclude that one provision must be held to prevail over the other because it is later. In the present matter, paragraph 110(1)(b) of the Act and section 21 of the National Capital Act are in irreconcilable conflict and it is our view that the maxim leges posteriores priores contrarias abrogant must be applied with the result that the application of section 21 of the National Capital Act should prevail over that of paragraph 110(1)(b) of the Act. Accordingly, to the extent that the more recent section 21 of the National Capital Act deems the National Capital Commission to be a registered charity and not an agent of the Crown for the purposes of the Income Tax Act, charitable donations made through the instrument of the National Capital Development Program Order Form would be treated as having been made to a registered charity for the purposes of subparagraph 110(1)(a)(i) of the Act.
Comments on C) and D) above: ----------------------------
We are unable to provide a definitive opinion with respect to any amounts paid to the Commission by a taxpayer as sponsor towards items other than street furniture inasmuch as such amounts are to be negotiated within the context of separate agreements with each such taxpayer. It is our view that each agreement must be reviewed on its own merits pursuant to a request for an advance income tax ruling as specified in Information Circular 70-6R and the Special Release thereto. Our comments made in A) and B) above would, of course, apply equally to such requests.
We would add that acknowledgment of a gift by the Commission through the installation of a plaque containing the coat of arms of a contributor and its name would not taint the donation as a gift for the purposes of subparagraph 110(1)(a)(i) of the Act. We are also of the view that an undertaking by the donee to maintain the donated item for a period of at least 99 years would not in and of itself cause the Department to treat a contribution as anything but a charitable gift for the purposes of subparagraph 110(1)(a)(i) of the Act.
These opinions are our best interpretation of the law as it applies generally. They may, however, not always be appropriate in the circumstances of a particular case and, as stated in paragraph 24 of Information Circular 70-6R, they are not binding on this Department.
We trust that the foregoing is of assistance in this matter.
for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch