The Concept of a Gift/Don
Comparative Study - Civil Law
Common Law - Tax Law

Conclusion

On December 20 th, 2002, the Minister of Finance published Legislative Proposals and Explanatory Notes Relating to Income Tax[122] containing proposals to modify the rules applicable to gifts under the Income Tax Act.

The most substantial amendment is the addition of new dispositions in section 248 ITA, which define the concept of “eligible amount of gift” that will be added to sections 110.1 and 118.1 ITA.[123] The new dispositions will standardize and extend the possibility of combining the supply of property or of specific services with a gift in a single transaction.

Under the current regime, a “mixed” gift is only recognized in the case of the supply of specific services, such as concerts, dinner or performance. The acquisition of property in consideration of a single payment, consisting of the sale price and of a gift in the amount exceeding the value of the property, did not qualify as a gift under the Income Tax Act. The former position was based on the concept of donative intent, specific to civil law, as the latter position was hindered by the presence of a consideration which is inconsistent with a gift under common law.

The proposals rely on the donor's “intention to give” to allow the combination of a supply of property with a gift for charitable purposes.[124] The amendments will apply within the guidelines set out by the Canada Customs and Revenue Agency in Technical News No. 26.[125]

Subsection 248(30) ITA defines the “eligible amount of gift” as the amount by which the fair market value of the property that is the subject of the gift exceeds the amount of the advantage to the donor. The amount of the advantage is defined at subsection 248(31) ITA.

Subsection 248(32) modifies the rules of private law concerning gifts for the purposes of the Income Tax Act. It allows for a consideration mixed with a gift setting aside the rules applicable at common law; it codifies the concept of donative intent of civil law. The Minister, though, has the discretion to decide if the transfer was made with the intention to give.

Where a gift is “mixed” with a supply of property or services, there will be a dissociation of the tax law from the provincial private law. The value of the gift under the Income Tax Act will be set according to the definition of “eligible amount of gift” at subsection 248(30) and (31) ITA. The donative intent or “intention to give” will be determined according to the private law rules as modified by subsection 248(32) ITA.

Even with the proposed modifications to the Income Tax Act concerning gifts, the rules applicable in private law have not been completely set aside for a gift to qualify under the Income Tax Act.

Bibliography

Literature and dictionaries:

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Administrative Positions

  • La collection APFF - “Table ronde sur la fiscalité fédérale” in Congrès 1998, Montréal, Association de planification fiscale et financière, 1999, Question 1 at 43:57 and 43:58 Legislative Proposals and Explanatory Notes Relating to Income Tax.

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  • CANADA CUSTOMS AND REVENUE AGENCY, Interpretation Bulletin IT-110R3, “Gifts and Official Donation Receipts”, June 20th, 1997.

  • CANADA CUSTOMS AND REVENUE AGENCY, Interpretation Bulletin IT-111R2, “Annuities Purchased from Charitable Organizations”, September 22nd, 1995.

  • CANADA CUSTOMS AND REVENUE AGENCY, Interpretation Bulletin IT-226R, “Gifts to a charity of a residual interest in real property or an equitable interest in a trust”, November 29th, 1991.

  • CANADA CUSTOMS AND REVENUE AGENCY, Interpretation Bulletin IT-244R3, “Gifts by Individuals of Life Insurance Policies as Charitable Donations”, September 6th, 1991.

  • CANADA CUSTOMS AND REVENUE AGENCY, Interpretation Bulletin IT-297R2, “Gifts in Kind to Charity and Others”, March 21st, 1990.

  • CANADA CUSTOMS AND REVENUE AGENCY, Income Tax - Technical News No. 26, December 24th, 2002.

Case Law

  • No. 688 v. M.N.R., 60 D.T.C. 130 (Tax Appeal Board)

  • Allan W. S. Tite v. Canada (Minister of National Revenue), 86 D.T.C. 1788 (Tax Court of Canada)

  • Aspinall v. M.N.R., 70 D.T.C. 1669 (Tax Appeal Board)

  • Brown v. Rotenburg, [1946] 4 D.L.R. 139 (Ontario Court of Appeal)

  • Burns v.The Queen, 90 D.T.C. 6335 (Federal Court of Appeal)

  • Cain v. Moon, [1896] 2 Q.B. 283

  • Canada v. Zandstra, [1974] 2 C.F. 254 (Federal Court-Trial Division)

  • Canada (Minister of National Revenue) v. Burns, 88 D.T.C. 6106 (Federal Court of Appeal)

  • Canada (Minister of National Revenue) v. McBurney, 85 D.T.C. 5433 (Federal Court of Appeal)

  • Charlebois v. Charlebois, [1974) C.A. 99

  • Cochrane v. Moore, (1890) 25 Q.B.D. 57 (Court of Appeal of England)

  • Commissioner of Taxation of the Commonwealth v. McPhail, [1967-68] 41 A.L.J.R. 346

  • Dubord c. S.M.R.Q., [1998] R.D.F.Q. 251 (Court of Québec - Civil Division)

  • Dutil v. The Queen, 85 D.T.C. 281 (Tax Court of Canada)

  • Gaudin v. M.N.R., 55 D.T.C. 385 (Tax Appeal Board)

  • Gervais v. Canada, 85 D.T.C. 5004 (Federal Court-Trial Division)

  • Hudson Bay Mining and Smelting Co.Limited v. The Queen, 89 D.T.C. 5515 (Federal Court of Appeal)

  • Johnstone v. Johnstone, (1913) 12 D.L.R. 537 (Ontario Court of Appeal)

  • The Queen v. Littler, 78 D.T.C.6179 (Federal Court of Appeal)

  • L'Écuyer v. SMRQ, (Court of Québec - Civil Division), file no.760-32-003895-986. December 1st 2000

  • McLean v. Pettigrew, [1945] R.C.S. 62

  • Messier v. Béique, [1929] R.C.S. 19

  • Pesant c. Pesant, [1934] R.C.S. 249

  • The Queen v. Diane L. Duguay and Amédée Duguay, 2000 D.T.C. 6620 (Federal Court of Appeal)

  • The Queen v. Friedberg, 92 D.T.C. 6031 (Federal Court of Appeal)

  • The Queen v. François Langlois, 2000 D.T.C. 6612 (Federal Court of Appeal)

  • The Queen v. Louise Marcoux-Côté and Alain Côté, 2000 D.T.C. 6615 (Federal Court of Appeal)

  • The Queen v. McBurney, 85 D.T.C. 5433 (Federal Court of Appeal)

  • The Queen v. Zandstra, 74 D.T.C. 6416 (Federal Court-Trial Division)

  • Re Cole, [1964] 1 Ch. 175 (CA)

  • Re Kuyat, [1962] 33 D.L.R. (2d) 153 (British Columbia Court of Appeal)

  • In re Ross : Hutchison c. Royal Institution for the Advancement of Learning, [1931] 50 B.R. 107

  • Re Zachariuc; Chevrier v. Public Trustee, (1984) 16 ETR 152 (Ontario District Court)

  • Sabourin c. Périard, [1974] B.R. 34

  • Slobodrian v. The Queen, 98 D.T.C. 3414 (Tax Court of Canada)

  • Thomas v. Times Book Co. Ltd., [1966] 1 WLR 911 (High Court of England)

  • Woolner v. Attorney General of Canada et Al., 99 D.T.C. 5722 (Federal Court of Appeal)

Footnotes

  • [122] CANADA, Department of Finance, Legislative Proposals and Explanatory Notes Relating to Income Tax, December 20th, 2002.

  • [123] Sub. 118(15) of the Legislative Proposals and Explanatory Notes Relating to Income Tax, ibid., proposes the addition of subsections 248(30) to 248(32) ITA concerning gifts.

  • [124] Sub. 248(31) as proposed in subsection 118(15) of the Legislative Proposals and Explanatory Notes Relating to Income Tax, ibid. See also the explanatory notes under sub. 248(30), (31) and (32) in the Legislative Proposals and Explanatory Notes Relating to Income Tax, ibid. and CANADA CUSTOMS AND REVENUE AGENCY, Income Tax - Technical News No. 26, December 24th, 2002.

  • [125] CANADA CUSTOMS AND REVENUE AGENCY, ibid.

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