personal-use property unless it is (iii) Ecological Property
Changes introduced in the March 19,
inventory. Personal-use property is
2007 budget permit corporations to
There are similar rules for gifts of
property that is used primarily for the claim a deduction for gifts of medicine
ecologically sensitive property to the
personal use or enjoyment and includes held in inventory to a registered charity,
crown, a municipality or a charity that is
jewellery, clothing, furniture, andcertain if the charity has received financial
approved for the conservation and
works of art. For purposes of calculating assistance from CIDA and uses the
protection of the environment. There are
the capital gain or loss, the adjusted cost medicine in carrying out its foreign
incentives for owners of ecologically
base and proceeds of disposition of activities. For gifts made on or after July
sensitive land to protect that land while
personal-use property are deemed to be 1, 2008, the medicine must have been
at the same time qualifying for a tax
at least $1,000. This rule eases the available to be used by the charity at least
benefit. The precise nature of the
compliance and administrative burden six months prior to its expiration date
conveyance of property will depend on
associated with the reporting of and must qualify as a drug (within the
legal issues and in some cases there may
dispositions of personal-use property.
be split ownership.
meaning of the Food and Drugs Act)
The $1,000 deemed adjusted cost base
which
meets certain technical
and deemed proceeds of disposition for
There are special valuation rules for
requirements. In addition, the charity
gifts of ecological property. These include
personal-use property will not apply if must in the opinion of the Minister of
gifts of the land itself and gifts of
the property is acquired after February International Cooperation meet certain
easements over the land. The use of
27, 2000, as part of an arrangement in conditions prescribed by regulation.
easements provides some flexibility,
which the property is given to a charity. This limits the situations in which
permitting the owner to retain legal title
Therefore, where this type of property corporations can claim tax relief for
while fettering its future use and
with a value of less than $1,000 is donationsofmedicinefrominventory.
preventing development, but this can
donated to a charity in those
circumstances, itwillnolongerbetreated raise difficult valuation issues in some 8. Gifts to the Crown as personal-use property, and any cases. The fair market value will be resulting capital gain will be taxable. determined by the Minister of the 8A gift to Her Majesty in right of
Canada or Her Majesty in right of a
Environment and there are extensive
(ii) Cultural Property
Province (a “crown gift”) is subject to the
rules for the procedures to be followed
same income limitation as other gifts, i.e.
A gift of certified cultural property to
and appeals if the amount determined is
75% of the donor’s income for the year
a designated institution will not trigger a
not acceptable to the donor. As in the
plus 25% of any taxable capital gain, plus
capital gain. The donor will be allowed a
case of gifts of cultural property, a charity
an amount equal to 25% of recapture of
credit (if an individual) or a deduction (if
accepting a gift is subject to a penalty if it
previously claimed capital cost allowance.
disposes of the property within ten years
a corporation) for the fair market value of
Consequently, crown gifts provide the
or changes its use without the consent of
the property and will not be limited to
same tax relief as gifts to other charities.
the Minister of the Environment. Under
75% of income. There are special rules
the
for determining the fair market value of
Ecological
Gifts
Program,
There are separate rules for gifts made
Environment Canada certifies that land is
prior to 1997 to the federal or provincial
cultural property. In addition, any capital
ecologically sensitive and an expert panel
crown.
gain on an object that is donated is
certifies the value.
exempt from tax. The determination is
For this purpose, the crown will
made by the Canadian Cultural Property
Gains realized on gifts made after
include an agent of the crown. In early
May 1, 2006 are exempt. Where gifts
2008, the federal government amended
Export Review Board and there are
were made prior to that date, 50% of the
the Museums Act to include the new
extensive rules for the procedures to be
gain is taxable.
followed and appeals if the amount
Canadian Museum for Human Rights.
determined is not acceptable to the 7. Gifts of Inventory museums listed in that Act (including, donor. The Board must certify the propertyanddesignatetheinstitution. Unlike gifts of capital property, gifts Canada, the Canadian Museum of
Gifts to that museum and the other
of inventory do not permit the donor to
for instance, the National Gallery of
Any unused credits or deductions Civilization and the Canadian Museum
choose an amount between the cost of
can be carried forward for five years, or of Nature) will all be treated as gifts to the
the property and its fair market value. As
back one year in the event of death. crown.
a result, a gift of property that is part of
Charities receiving gifts of cultural the inventory of a business will result in property are subject to a penalty tax in an income inclusion. While there will be 9. Charitable Donations of RRSPs, certain circumstances if they dispose of a corresponding eligible amount for the 9RRIFs and TFSAs
the gifted property within ten years of its
gift (the eligible amount will depend on
Donations made as a consequence of
receipt. CRA’s administrative position on a direct designation of proceeds of RRSPs,
whether any advantage is received by the
gifts by artists is set out in IT-504R2 RRIFs or TFSAs to a charity on the death
donor), it is frequently less advantageous
entitled “Visual Artists and Writers”, and of an individual qualify as gifts eligible
to donate inventory rather than capital
its position on gifts of cultural property property. This is one of the reasons why for the individual donation tax credit, if
setoutin IT-407R4entitled“Dispositions special rules were enacted for gifts of the transfer of funds from RRSPs or
of Cultural Property to Designated inventory made by artists, as discussed
RRIFs to the charity occurs within 36
Canadian institutions”.
above.
months of death. The transfer is deemed
