Donations and gifts
A donation tax credit can be claimed for charitable donations that the deceased or their spouse or common-law partner made before the date of death in the Final Return. Donations made by the estate can be claimed on the T3 Trust Income Tax and Information Return.
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Amounts that can be claimed for a donation tax credit
The amount of a donation tax credit that can be claimed in any tax year is based on the eligible amount of a gift. The donation tax receipt received from a qualified donee will, in addition to other information, show:
The eligible amount of the gift
This is the amount by which the fair market value of the gifted property (e.g. amount of cash or fair market value of a non-cash gift, such as belongings, property or art) exceeds the amount of an advantage, if any, in respect of the gift. There are situations in which the eligible amount may be deemed to be nil.
If no advantage was received in respect of the gift, the eligible amount of the gift will be the total amount of the cash gift or the fair market value of a non-cash gift.
Report the eligible amount of the gift in the Final Return or return for the estate.
The amount of any advantage received in respect of a gift is generally the total value of any property, service, compensation, use, or any other benefit that you are entitled to as partial consideration for, in gratitude for, or in any other way related to the gift. The advantage may be contingent or receivable in the future, either to you, or a person or partnership not dealing at arm’s length with you.
For example, you donate $1,000 to the Anytown Ballet Company, which is a registered charity. In gratitude, the company provides you with 3 tickets to a show that are valued at $150. You are therefore considered to have received an advantage of $150. The eligible amount of the gift is $850 ($1,000 – $150).
The advantage also includes any limited-recourse debt (including amounts owed by persons not dealing at arm's length with you) in respect of the gift at the time it was made. For example, there may be a limited-recourse debt that can reasonably relate to a gift to a qualified donee as part of a gifting arrangement that is a tax shelter. Generally, a limited-recourse debt is one where the borrower is not at risk for the repayment. In this case, the eligible amount of the gift will be reported in box 13 of Form T5003, Statement of Tax Shelter Information. For more information on tax shelters and gifting arrangements, see Guide T4068, Guide for the Partnership Information Return (T5013 Forms).
Donation made before the date of death
- Claim on line
- 34900 of the deceased’s Final Return
Complete Schedule 9, Donations and Gifts to determine the amount you should claim on line 34900. You can claim on the deceased’s Final Return, the eligible amount of gifts that the deceased or their spouse or common-law partner made before the date of death.
The deceased, or their spouse or common-law partner, may have donated amounts in the 5 years before the year of death (10 years before the year of death for gifts of ecologically sensitive land made after February 10, 2014). As long as the deceased, or their spouse or common-law partner, did not previously claim the amounts, you can claim them in the year of death.
If an advantage was received in respect of a gift, claim only the eligible amount of the gift.
Support the claims for gifts with official donation receipts that the registered charity or other qualified donee has issued, showing either the deceased's name, or the name of the deceased's spouse or common-law partner.
If you are claiming a donation in the deceased’s Final Return, where part of the donation has already been claimed in an earlier tax year, attach a note to the return giving the amounts and the year or years the donations were made. Also, attach any receipts that were not attached to previous returns, if applicable.
If the gift is a gift of ecologically sensitive land or a gift of certified cultural property, additional documentation is required to support the tax credit claim. See Pamphlet P113, Gifts and Income Tax for more information.
- Find out which organizations are considered qualified donees
- How to complete Schedule 9, donations and gifts
Charitable donations cannot be carried forward from a Final Return to a T3 Return.
Claim limit for donations in the Final Return
The eligible amount of charitable gift(s) that may be claimed on the deceased’s Final Return for purposes of the donation tax credit may be up to whichever of the following amounts is less:
- The eligible amount of the charitable gift(s), made in the year of death (this may include charitable gifts made by a GRE or a former GRE), plus the unclaimed portion of the eligible amount of any charitable gifts made in the 5 years before the year of death
- 100% of the deceased's net income on line 23600 on the return
Any excess can be claimed on the return for the previous year (up to 100% of the deceased person's net income for that year).
Unlike charitable gifts, the total eligible amount claimed on the deceased’s Final Return, for gifts of ecologically sensitive land and certified cultural property, are not limited to a percentage of the deceased’s net income.
Claim a donation on an optional T1 return
You can split donations claimed between the Final Return and any optional T1 returns you are eligible to file.
The amount that can be claimed on a return cannot be more than net income reported on that return.
The total donations claimed across the Final Return and optional T1 returns cannot be more than the eligible amount of gifts made in the year of death plus the unclaimed portion of the eligible amount of gifts made in the 5 years before death (10 years for gifts of ecologically sensitive land made after February 10, 2014).
Donation made after death
- Claim on line
- 34900 of the deceased’s Final Return or 30 of Schedule 11A of the T3 Return
Estate donations (donations made by will and designation donations) are deemed to be made by the individual’s estate and, where certain conditions are met, by the individual’s Graduated Rate Estate (GRE). The donations are deemed to be made at the time the property is transferred to the donee.
GRE donations are donations made by an estate that is a GRE to a qualified donee. The donated property must be property that was acquired by the estate, on and as a consequence of the death (or property that was substituted for such property). GRE donations can include designation donations.
If an advantage was received in respect of a gift, claim only the eligible amount of the gift.
What is a designation donation
A designation donation is a donation of a direct distribution of proceeds to a qualified donee from a registered retirement savings plan (RRSP), (including a group RRSP, a registered retirement income fund (RRIF), a tax-free savings account (TFSA), or a life insurance policy (including a group life insurance policy) as a result of a beneficiary designation.
The designated donation definition does not apply to the direct distribution of proceeds from a life insurance policy if the qualified donee is the policyholder or an assignee of the deceased person’s interest in the policy.
An estate, whether it is a GRE or not, can generally claim a charitable donation tax credit for a gift made by the estate in the year or in any of the 5 following years. In the case of a gift of ecologically sensitive land made after February 10, 2014, it can be claimed in any of the 10 following years.
Deaths before 2016
For deaths that occurred before 2016, gifts bequeathed in the deceased person’s will and designation donations were deemed to be made by the individual immediately before their death. For more information on such gifts where death occurred before 2016, see the T3 Trust Guide for the 2015 tax year.
How to claim in the T3 Trust Income Tax and Information Return (T3 Return)
Complete Schedule 11A to calculate the total donations and gifts tax credit.
Claim limit for charitable donations in the T3 Return
The amount of the charitable gift(s) that may be claimed on the estate's return for purposes of the tax credit may be up to whichever of the following amounts is less:
- The eligible amount of the charitable gift(s), made in the trust's tax year (this may include charitable gifts made by the estate up to 5 years previous, but may not include donations from before the death)
- The sum of:
- 25% of taxable capital gains from charitable gift(s) of capital property, less any capital gains deductions claimed against that property
- 25% of the recaptured of capital cost allowance reported as a result of making the charitable gifts
- 75% of the trust's net income
Unlike charitable donations, the estate’s total eligible amount claimed for gifts of ecologically sensitive land and certified cultural property are not limited to a percentage of net income.
Carry back gifts of ecologically sensitive land and certified cultural property to the Final Return
If you carry back a gift of ecologically sensitive land or certified cultural property to the Final Return, use line 12 of the Schedule 11A of the T3 Return to indicate the amount of previously unclaimed certified cultural property gifts and gifts of ecological sensitive land that you are currently applying to the deceased’s Final Return and return for the immediately preceding year.
Spousal sharing is not allowed
A surviving spouse or common-law partner is not allowed to report donations made by the deceased's estate on their own tax returns.
Carrying back donations after the death to the Final Return
Under certain conditions, a donation by the estate can be carried back to the Final Return of the deceased. To be eligible to carry back the donation, ensure all 3 of the following conditions are met:
- The estate must meet all the requirements of a GRE except for the 36-month time limit
- The gift must be made within 60 months after the date of death
- The donated property or proceeds must have been acquired by the estate, on and as a consequence of the death (or property that was substituted for such property)
If you carry back the donation to the Final Return and you need to file a T3 Return, ensure that you:
- include the total donation amount in Schedule 11A of the T3 Return for that tax year
- subtract the amount being applied to the Final Return in line 4 of Schedule 11A
- send us Form T1-ADJ, T1 Adjustment Request with the donation credit being claimed in the Final Return or send the CRA a signed letter providing the details of your request
Make sure you include the official donation receipt with both the Final Return and the T3 Return.
You may not have to file a T3 Return and Schedule 11A if the estate is distributed immediately after the person dies, or if the estate did not earn income before the distribution. In this case, claim the amount on line 34900 of the Final Return. Refer to Who should file a T3 Return in the Guide T4013, T3 Trust Guide.
Documentation if you don't have an official donation receipt
For gifts that will be received later by the qualified donee, provide a copy of all of the following:
- The will
- A letter from the estate to the charitable organization that will receive the gift, advising of the gift, a description of the property being gifted and its estimated value
- A letter from the charitable organization acknowledging the gift and stating that it will accept the gift
- A statement or letter from the legal representative of the estate stating all of the following:
- The estate is the Graduated Rate Estate (GRE) of the deceased individual and will be designating itself as such
- The estate intends to make the gift within 60 months after the date of death
- The amount of the gift claimed on the Final Return of the person who died will not be claimed on any other return (of any estate of the deceased individual in any tax year)
- If the future gift is a non-cash gift, its value can be reasonably ascertained and supported
Carry the donation back to a different tax year
Subject to the same conditions as a carry back to the Final Return, a GRE donation can alternatively be carried back to:
- an earlier tax year of the GRE
- the year immediately preceding the death
Non-cash gifts (belongings, property, art)
In addition to gifts of cash, it is also possible to claim a donation tax credit in respect of gifts in kind such as personal belongings, capital property, property that is inventory of a business carried on by the donor, or art.
Eligible amount of non-cash gifts
The eligible amount of a gift in kind is generally based on the fair market value of the property that is gifted at the time the gift is made. If any advantage has been received in respect of the gift, the eligible amount of the gift will be less than the fair market value of the property gifted.
The fair market value of a gift is usually the highest dollar value you can get for your property in an open and unrestricted market, between a willing buyer and a willing seller who are acting independently of each other.
Non-cash gifts may require an appraisal to support the fair market value of the property. Information on donation appraisals can be found in Pamphlet P113, Gifts and Income Tax, under the heading Donation appraisals.
In certain cases, the fair market value used to determine the eligible amount of a gift may be deemed to be a lesser amount that the fair market value that is otherwise determined for the property. Information on these special rules that reduce the eligible amount or fair market value of a gift, see Pamphlet P113, Gifts and Income Tax, and Income Tax Folio S7-F1-C1, Split-receipting and Deemed Fair Market Value.
When an individual dies, the individual is generally deemed to have disposed of all capital property immediately before the individual’s death for an amount equal to the fair market value of the property. The recipient of the property, such as a deceased’s estate, is deemed to have acquired that property for a cost equal to that same fair market value.
Special rules apply relating to dispositions of property by way of gifts to qualified donees. See the following sections of Pamphlet P113, Gifts and Income Tax:
- Gifts of ecologically sensitive land
- Gifts of certified cultural property
- Gifts of capital property
- Are you an artist?
- Are you an art or antiques dealer?
- Listed Personal Property
- Capital gains and losses
- Calculating your increased donation limit
You can also refer to Pamphlet P113, Gifts and Income Tax for additional information on:
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