On April 27, 2016, CRA released 2016-0624851C6, a French language response to a question made on January 21, 2016, at the Ordres des CPA du Québec — Table ronde sur la fiscalité des particuliers. The question posed to CRA was “Whether the existing administrative position to allow a charitable gift made by will to be included in the “total charitable gifts” of the deceased individual’s spouse or common law partner will continue to apply as of the 2016 taxation year?” CRA responded that the current administrative position will not continue to apply.
According to CRA’s response letter, donations shared between spouses are now covered under clause (c)(i)(A) of the definition of “total charitable gifts” found at subsection 118.1(1) of the Income Tax Act (“ITA”), and only apply to donations made during that individual’s lifetime. CRA notes that where an individual is not a trust, clause (c)(i)(C) of the proposed definition of “total charitable gifts” in subsection 118.1(1) — the section dealing with graduated rate estates — states that the total charitable gifts of the individual for a particular tax year includes the “eligible amount of the gift” with the following conditions.
- the gift is made by the individual’s estate;
- subsection 118.1(5.1) applies to the gift; and
- the year of the gift is the deceased’s taxation year or the previous taxation year.
Finally, CRA notes that since clause (c)(i)(C) of the proposed definition of “total charitable gifts” in subsection 118.1(1) does not include donations from an estate of a spouse or common-law partner, it is CRA’s position that the total charitable gifts of the surviving spouse for the taxation year, or the five preceding taxation years, may not include the eligible amount of a gift made by the estate. As a result of these changes, CRA will not be continuing with the administrative practice relating to gifts made in the context of a deceased individual for deaths after 2015.
For more information on the effects of the draft legislative proposals released by the Department of Finance on January 15, 2016, see Charity Law Bulletin No. 386 by Elena Hoffstein in this update.