HOME > CONTRIBUTE > LEGACY/planned GIVING
   
Will the legacy you leave ... reflect the life you lived?

Gifts of Capital Property

Capital property includes depreciable property, and any property that, if sold, would result in a capital gain or a capital loss. You usually buy it for investment purposes or to earn income. Capital property does not include the trading assets of a business, such as inventory. The following properties are generally capital properties:

  • cottages;
  • securities, such as stocks, bonds, and units of a mutual fund trust; and
  • land, buildings, and equipment you use in a business or a rental operation.

If you donate capital property, Canada Revenue Agency considers you to have disposed of that property for proceeds equal to the fair market value (FMV) of the property. You have to report any capital gain on your return in the year you donated the property. You can choose an amount that is not greater than the FMV and not less than the greater of:

  • any advantage in respect of the gift; and
  • the ACB of the property (if the property was depreciable property, the lesser of its ACB and the un-depreciated capital cost of the class of the property).

Proceeds of Disposition
http://www.cra.gc.ca/ You will find the information on page 13

If you make a gift of capital property to the EFC, and the FMV of the donated capital property, otherwise determined, is more than its adjusted cost base (ACB), you may designate an amount that is less than the FMV to be the proceeds of disposition. This may allow you to reduce the capital gain otherwise calculated. If you choose to designate an amount in respect of the donation, you can designate the value of the donated property. You can choose an amount that is not greater than the FMV and not less than the greater of:

  • any advantage in respect of the gift; and
  • the ACB of the property (if the property was depreciable property, the lesser of its ACB and the undepreciated capital cost of the class of the property).

Treat the amount you choose as the proceeds of disposition when you calculate any capital gain. Also use this amount to determine the eligible amount of the gift, which you need to calculate the tax credit. If when you made the donation, the FMV was less than the ACB, the proceeds of disposition must equal the FMV of the donated property. This amount will be used to calculate any capital loss on the disposition of a non-depreciable capital property and the eligible amount of the gift, which you need to calculate the tax credit. For more information, see Interpretation Bulletin IT-288, Gifts of Capital Properties to a Charity and Others.

Deemed fair market value

Under proposed legislation, for a gift of property made to a qualified donee after 6:00 p.m. EST, on December 5, 2003, the fair market value of the property gifted will be deemed to be the lesser of the property’s:

  • fair market value otherwise determined; and
  • its cost (or ACB if it is capital property), immediately before the gift was made. This limitation applies to property that was acquired under a gifting arrangement. Unless the gift is made as a consequence of the taxpayer’s death, this rule also applies if the property was acquired:
  • less than three years before the day the gift was made; or
  • less than 10 years before the day the gift was made and it is reasonable to conclude that when the property was acquired, one of the main reasons for the acquisition was to make a gift of it. If a property gifted on or after July 18, 2005 was acquired in a non-arm’s length transaction during the 3-year or 10-year period, the cost (or adjusted cost base if it is capital property) of the gifted property will be deemed to be equal to the lower of the cost to the donor and the lowest cost to a party to the non-arm’s length transaction.

 

Legacy Giving Links:

Form to obtain Gift Annuity quote

Form for Donation of Securities

LG Contact information:
To know more about legacy giving, please contact Bill Winger, Vice President, Operations at legacygiving@theEFC.ca or (905) 479-5885 x 231 or toll free at 1-866-302-3362 x 231

Copyright ©2014 The Evangelical Fellowship of Canada. All rights reserved.