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Gifts of Tangible Personal Property

  • Gifts of Tangible Personal Property
    Tangible property includes art works, books, household furnishings, automobiles, equipment and collections. Investment assets such as real estate, securities and the like are not considered tangible personal property. If you have objects in good condition with some value, but they are no longer of value to you, this type of gift is a possibility.
     

    Benefits to you?

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    Nora Layard
    • As a donor you receive the satisfaction of seeing the gift at work now or in the near term.
    • You receive an immediate donation receipt (if the organization is a registered charity) for the fair market value of the gift, as determined by a qualified appraisal.
    • 50% of any capital gain is taxable but the charitable donation tax credit will likely exceed the tax on the gain, resulting in net tax savings.

    How can I give a gift of tangible assets?

    Ask the organization about its gift acceptance policies. Depending on the value of the asset, a gift to the organization may require signature to a legal document that transfers ownership. Opinions may be needed regarding the object's origins, history and chain of title/ownership. An appraisal may be required.
     

    An important consideration:

    To be a gift, there must be a voluntary transfer of property without consideration. There must be no expectation of right, material benefit or advantage. For instance, the value of merchandise or supplies donated as a promotion or for advertising purposes does not qualify as a gift. These items should be deducted as a business expense by the owner. Nor does property of little value to the donor (used clothes for example) or contributions of services, time, or skill qualify as a gift. A gift must involve the transfer of property.
     
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    Gary Tipper
    Please note that special considerations may apply to culturally signficant property. The Canadian Heritage website says that "UNESCO defines cultural property as property which, on religious or secular grounds, is of importance for archaeology, prehistory, history, literature, art or science. "Cultural property" therefore includes a wide range of objects, from works of art to archaeological artifacts, military objects to archival material, ethnographic material to decorative arts and scientific instruments. For the purposes of the Cultural Property Export and Import Act, cultural property must be movable, that is, it can be transported from one place to another and it need not necessarily be Canadian in origin. Under the terms of the Cultural Property Export and Import Act, a cultural property export permit is required to export any item of "controlled cultural property" ... In general, cultural property is only controlled if it is more than fifty years old and was made by a person who is no longer living. Other restrictions apply in individual categories of the Control List."


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    Gary Tipper

    Planned gifts can provide beneficial results for a donor but, in order to ensure that all relevant issues have been considered and addressed and that all Income Tax Act, Canada provisions and regulations are met, prospective donors should seek qualified legal and accounting advice.

     


    Give Green Canada acknowledges and thanks Lorna Somers and Frank Minton for pre-approving the use of their book Planned Giving for Canadians as the basis for the information provided about different types of gifts.

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