Topics: What's New from the Charities Directorate of CRA, Canadian Charity Law, Receipting by Canadian Registered Charities, Planned Giving and Canadian Charities
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.
In the What's New 2017 section it notes:
What's new for 2017?
Ecological gifts program – Under proposed changes, for gifts of ecologically sensitive land made after March 21, 2017, there are a number of changes to the Ecological gifts program related to the approval of recipients, private foundations and personal servitudes. For dispositions made and changes of use that occur after March 21, 2017, there are also new rules applicable to unauthorized changes of use or dispositions of property. For more information, see Gifts of ecologically sensitive land.
Reproduced below is the whole section on Gifts of ecologically sensitive land:
Gifts of ecologically sensitive land
You can claim a tax credit based on the eligible amount of a gift of ecologically sensitive land including a covenant, an easement, or, in the case of land in Quebec, a real servitude (or under proposed changes, for gifts made after March 21, 2017, a personal servitude [the rights to which the land is subject and which has a term of not less than 100 years]) you made to Canada, or one of its provinces, territories, or municipalities, or a registered charity approved by the Minister of Environment and Climate Change Canada (ECCC).
Under proposed changes, a gift of ecologically sensitive land cannot be made to a private foundation after March 21, 2017.
Gifts of ecologically sensitive land made to a municipal or public body performing a function of government in Canada, also qualify for a tax credit.
In addition, under proposed changes, gifts of ecologically sensitive land to municipalities and municipal and public bodies made after March 21, 2017 must also be approved by the Minister of ECCC on a case by case basis.
The Minister of ECCC, or a person designated by that minister, has to certify that the land is important to the preservation of Canada's environmental heritage. The Minister will also determine the fair market value (FMV) of the gift.
For a gift of a covenant or an easement, or in Quebec, a real servitude (or under proposed changes, a personal servitude when certain conditions are met), the FMV of the gift will be the greater of:
- the FMV of the gift otherwise determined; and
- the amount of the reduction of the land's FMV that resulted from the gift.
The FMV of the donated property, as determined or redetermined by the Minister of ECCC, will apply for a 24-month period after the last determination or redetermination. If you make a gift of the property within that 24-month period, it is the last determined or redetermined value that you use to calculate the eligible amount of the gift, whether you claim the gift as a gift of ecologically sensitive land or as an ordinary charitable gift.
To help make sure that the donated land is protected and not subsequently used for other purposes, a tax of 50% of the FMV of the land is charged to a recipient who, without the consent of the Minister of ECCC, changes the use of the land or disposes of it.
Under proposed changes, where the gifted land is transferred between organizations for consideration after March 21, 2017, the recipient of the transferred property will be charged the 50% tax if they subsequently change the use or dispose of the property without the consent of the Minster of ECCC.
Your claim for a gift of ecologically sensitive land is not limited to a percentage of your net income.
For a gift of ecologically sensitive land made before February 11, 2014, any unclaimed portion of the eligible amount of the gift can be carried forward for up to five years.
For a gift of ecologically sensitive land made after February 10, 2014, the carry-forward period is ten years.
The Minister of ECCC (or if the land is located in Quebec, the ministère du Développement durable, de l'Environnement et de la Lutte contre les changements climatiques) will issue you a certificate indicating the FMV of the gifted property and that the property is important to the preservation of Canada's environmental heritage. Attach this certificate to your income tax and benefit return. Enter the eligible amount of the gift of ecologically sensitive land on line 342 of Schedule 9, Donations and Gifts.
You may have a capital gain or loss for the land that you donated. For information, see the section called Capital gains and losses.
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.