The CRA has revised its Pamphlet “Gifts and Income Tax P113(E) Rev. 11” to reflect recent budget changes including reducing the incentives for packaged flow through donation schemes and other provisions from the 2011 Federal Budget.
Here is the revised pamphlet:
Here are some of the major changes:
“What’s new for 2011 and 2012?
Donations of publicly listed flow-through shares - Under proposed changes, if you donate property to a qualified donee after March 21, 2011, that is, at the time of the donation included in a flow-through share (FTS) class of property, and you have an exemption threshold in respect of the FTS class of property, you may be deemed to have a capital gain. For more information, see Capital gains realized on gifts of certain capital property.
Recovering tax assistance for returned property - Under rare and unique circumstances, there may be a legal requirement for a donee to return a gift. Under proposed changes, a qualified donee who returns a property to a taxpayer after March 21, 2011, that is, either the original property previously donated by the taxpayer, or another property returned as compensation for, or in substitution for, the original property, may be required to file an information return with us, and to provide a copy to the taxpayer. As a result, the taxpayer’s prior donation claim may be reassessed in respect of the returned property. For more information, see Receipts.
Granting of options to qualified donees - Under proposed changes, for options granted to qualified donees after March 21, 2011, no official donation receipt may be issued to the qualified donee until such time as the qualified donee exercises or sells the option.
Gifts to registered charities and other qualified donees - Under proposed changes, effective on the later of January 1, 2012, and the date the legislation receives Royal Assent, certain qualified donees will be required to be on a publicly available list maintained by us in order to issue receipts. For more information, see Gifts to registered charities and other qualified donees. “
It is also interesting that the Budget contained a provision that modifies the qualified donee category of “charitable organizations outside Canada to which the Government of Canada has made a gift either during the donor’s tax year, or in the 12 months just before that period” to provide “under proposed changes, effective on the later of January 1, 2012, and the date the legislation receives Royal Assent, during the 36 month period beginning 24 months before the time of the donor’s gift)”
CRA has also updated the paragraph dealing with US donations:
“Gifts to U.S. charities
Generally, if you have U.S. income, you can claim any gifts to U.S. charities that would be allowed on a U.S. return. You can claim the eligible amount of your U.S… gifts up to 75% of the net U.S. income you report on your Canadian return. However, you may be able to claim the eligible amount of your gifts to certain U.S. organizations up to 75% of your net world income. You can do this if you live near the border in Canada throughout the year and commute to your principal workplace or business in the United States, and if that employment or business was your main source of income for the year. Similarly, your claim will also not be restricted to net U.S. income if your gift is to a U.S. college or university at which you or a member of your family is or was enrolled or if your gift is to a prescribed university as referenced in the list of qualified donees.”
There is also discussion of the budget provisions dealing with return of a gift:
“Under proposed changes, where a qualified donee returns a property to you after March 21, 2011, that is, either the original property that you previously donated, or any other property that may reasonably be considered compensation for, or a substitute for, the original property and where the fair market value of the original property is more than $50, the qualified donee must file an information return with us. The qualified donee must send the information return to the Audit Section, Compliance Division of our Charities Directorate. The qualified donee must also provide a copy of this information return to you. We may then reassess your tax return for the applicable tax year to reduce the amount of your prior claim, and to amend the reporting of the disposition of the original property. For more information, go to BoxTechnical Amendments.”
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.