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Split Receipt Gifts

  • Split Receipt Gifts

    Split receipting allows for a partial sale and partial gift of property.

    Until recently, a transfer of property was not a gift to the extent that a person transferring property to another received some benefit or advantage in return for the transfer. For example, where a taxpayer sold property for an amount less than its fair market value, the portion of the value that was, in effect a gift, would not attract the tax benefits associated with gifts. The introduction of “split-receipting” has changed this.

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    Debbie Kelsall

    Donation receipts can now be issued in circumstances where an intention to make a gift is present but some benefit or advantage is also received by the donor.  A qualified recipient can issue donation receipts reporting both the fair market value or property transferred to it and the “eligible amount of the gift”, which is the difference between the fair market value of the property transferred and the value of any advantage to the donor. The donor’s capital gain is computed based on the fair market value of the property transferred, while the donor’s donation tax credit or deduction is based on the eligible amount of the gift.

    Revenue Canada guidelines for split receipting are clear that the transfer of property must be voluntary and it must have an ascertainable value. Gifts of real estate and charitable gift annuities are affected by split receipting guidelines. For detailed information please consult with your professional advisors.

    Important note

    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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