Generally, a gifting arrangement is any arrangement under which it may reasonably be considered, based on statements or representations made or proposed to be made in connection with the arrangement, which a person entering into the arrangement would do one of the following:
- make a gift to a qualified donee, or make a political contribution, of property acquired by the person under the arrangement
- incur a limited-recourse debt that can reasonably be considered to relate to a gift to a qualified donee or a political contribution
A political contribution refers to a monetary contribution to a registered party, a registered association, or a candidate as defined in the Canada Elections Act.
For more information, see Limited-recourse amounts in respect of a tax shelter.
The tax shelter rules for gifting arrangements generally apply to gifts, monetary contributions, and representations made and property acquired under the gifting arrangement after February 18, 2003.
As part of the overall gifting arrangement, documents such as purchase agreements, transfer agent agreements, deeds of gift, and other documents may be used at some future date. The promoter has to provide unsigned copies of such documents with their application to get a tax shelter identification number.
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