Planned Giving and Canadian Charities
January 27, 2018
P113 - Gifts and Income Tax 2017 is the main CRA publication dealing with gifts and their income tax consequences for Canadian taxpayers. The publication has been revised with some minor changes in 2017. They reflect that the rules for donations from an estate are no longer proposed but are final. There were also some some changes to the Ecological gifts programs.
November 30, 2017
The US House and Senate are looking at major changes to the tax code that could have a significant impact on US donors and whether they receive any tax incentives for their donations. Now, 1 in 3 US donors may get a tax incentive when they donate to charity; with the proposed changes, only 1 in 20 US donors will receive a tax incentive for their donations. A number of US charity umbrella groups have been lobbying hard to prevent certain changes. We will know shortly whether the charity sector will be blindsided or if last minute amendments will occur. There are lots of lessons here for Canada.
October 28, 2017
Many Canadian charities conduct gala dinners although it seems fewer than in the past. We recently spoke to CRA regarding the amounts that should be deducted for gala dinners as an advantage when issuing receipts. CRA said that any costs to set up the event, eg. venue, flowers, decorations, etc. are considered to be fundraising costs and should be reflected as such on the T3010 but in terms of the amounts that need to be deducted from an official donation receipt, it would be the value of the meal, drinks, advantage etc. received by the donor – not necessarily the costs.
Essentially what would a donor would pay to have a dining experience at a similar venue. In terms of “nicer” venues, they said that while the venue cost isn’t necessarily deducted as an advantage, it is generally factored into the value received by the donor since dinner at a similar “nicer” venue will likely be higher, thus a higher advantage received.
September 15, 2017
CRA recently released a letter that discusses whether a transfer of property by a corporation to its shareholder that is a private foundation is a gift for purposes of section 38(a.1) of the Income Tax Act (Canada) such that the taxable capital gain from the transfer would be zero.
September 01, 2017
The Canada Revenue Agency recently released its views on when the adjusted cost base of a life insurance policy may be used to determine the cost of a life insurance policy when a life insurance policy is gifted to a qualified donee.
April 27, 2017
We have provided two letters recently released by the Canada Revenue Agency.
April 02, 2017
Canada has a mechanism to recognize certain foreign universities for purposes of donations. It is probably the most generous tax incentive system of any country in the world. Essentially if you are a degree granting university outside of Canada and you have 2 Canadian students generally studying at your university/college then you can apply to get on a list maintained by the Canada Revenue Agency. Once you are on the list you are considered to be a "qualified donee". That means you can issue Canadian official donation receipts under the Income Tax Act (Canada). WIth such status a Canadian who donates to your prescibed foreign university obtains the same benefits - of between 40 - 70% as if they had donated to a Canadian university.
January 16, 2017
Kate Robertson and Mark Blumberg recently prepared an article, "Some thoughts on Professional Athletes and Philanthropy in Canada: Part 1" which provides helpful information and guidance for professional athletes and their trusted advisors who are exploring philanthropic options in Canada. Part 2 of this article series will provide suggestions and tips for professional athletes on operating a successful Canadian registered charity.
November 03, 2016
CRA recently released its first video as part of a new educational video series on 'Gifting and Receipting'. This series is meant to educate the public, donors, and those involved in the charitable sector on the type of donations that are tax-receiptable and the different CRA rules regarding receipting.
June 29, 2016
As a result of the 2016 Quebec Budget, Canadian registered charities are no longer required to complete a separate charitable registration in Quebec in order to be able to issue tax receipts to donors in Quebec.
March 23, 2016
The CAGP will be offering an Advanced Canadian Gift Planning Course in Toronto from June 1-3, 2016.
February 13, 2016
The CRA has provided some information on how estate donations will change in 2016. Essentially the tax benefits for bequests and certain designations may increase as there is added flexibility as which income can be offset by the estate's charitable donation.
January 19, 2016
The Department of Finance has released Legislative Proposals Relating to Income Taxation of Certain Trusts and Estates. There are a number of amendments to the Income Tax Act. The Conservative government had previously provided greater flexibility with bequest donations so that the donation could be made by the individual or the estate. However, there was a deadline of 36 months from the date of death. It has now been extended to 60 months or 5 years.
November 23, 2015
CRA recently released a letter which discusses whether a gift of a share of the capital stock of a corporation to a public foundation to which subsection 118.1(5) applies after 2015, would qualify as an 'excepted gift' as defined in subsection 118.1(19) of the Income Tax Act.
August 26, 2015
The Department of Finance in late July released for consultation purposes draft legislative proposals that will have an impact on charities. The 2 main changes are an "exemption from capital gains tax for certain dispositions involving private corporation shares or real estate where the cash proceeds are donated to a registered charity within 30 days" and "providing rules to enable registered charities to acquire or hold interests in limited partnerships in certain circumstances."
July 05, 2015
The CRA has posted guidance on the recent 2015 Federal Budget and specifically the provisions relating to donations involving private corporation shares or real estate and the ability of registered charities to invest in limited partnerships.
April 28, 2015
Properly issuing official donation receipts has been challenging for many registered charities. According to the CRA, 89% of registered charities that are audited are not correctly issuing official donation receipts. Issuing incorrect receipts can result in revocation or penalties. It is easier to do it right than fix problems later! Here is a new half-day program from Blumbergs entitled "Fundamentals of Receipting by Canadian Charities".
March 11, 2015
CRA recently released a letter which discusses whether a gift by will of marketable securities provided to a Foundation would be deemed to have been made immediately before the death of the donor. CRA concluded that the gift did constitute a gift by will made immediately before the death of the donor under subsection 118.1 (5) of the ITA. The letter appears to have been written before the 2014 budget, which will have an impact on the bequests are dealt with in estates where the testator died on or after January 1, 2016.
February 21, 2015
The British Columbia Supreme Court recently released a decision, Re Mulgrave School Foundation, which discusses charitable gifts that are made for a specific charitable purpose and whether it is possible to change that purpose. Unfortunately, in this case the donors and schools had restricted their gift to be an endowment for scholarships and they did not have in the agreement a power to amend the restrictions.
February 13, 2015
CRA recently released a letter with respect to spousal sharing of charitable gifts that was written to David Sherman, one of Canada's top tax lawyers. As a result of recent legislative amendments in Bill C-43 which received Royal Assent on December 16, 2014, CRA has changed their administrative practice with respect to spousal sharing of charitable gifts with respect to deaths occurring after 2015 (i.e. in 2016 or later). Bill C-43 included amendments affecting how will and certain designated gifts will be treated for tax purposes for gifts occurring after 2015 and according to CRA this necessitated the change. The legislative changes affect the taxation of gifts made by will - in some case they will provide greater flexibility but in other cases or situations they may deny certain tax benefits.
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