Limitations on claim amount of gift

The amount of the gift(s) that may be claimed on the deceased's final return for purposes of the tax credit must be the lesser of:

For a gift of property made to a qualified donee, special rules may apply to limit the fair market value (FMV) of the property gifted, which limits the eligible amount of the gift that can be used in computing the donation tax credit amount. When the rules apply, the FMV of the donated property will be deemed to be the lesser of the property's:

The limitation on the eligible amount of a gift will apply where:

The limitation on the eligible amount of a gift will not apply to gifts of any of the following:

There are also special anti-avoidance rules that may apply where a taxpayer has attempted to avoid the application of the limitation rules. For more information, see Pamphlet P113, Gifts and Income Tax.

If the property was acquired as part of a gifting arrangement that is a tax shelter, the eligible amount will be reported in box 13 of T5003 slip, Statement of Tax Shelter Information.

Sometimes, a capital property is gifted. At the time the property is gifted to a qualified donee, its FMV may be more than its ACB.

When the FMV is more than the 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 that is less than the FMV as the amount to be used as the proceeds of disposition, this amount will be used to determine the eligible amount of the donation. You can choose to designate an amount that is not greater than the FMV and not less than the greater of:

Treat the amount you choose as the proceeds of disposition when you calculate any capital gain.

For more information about charitable donations and the special rules that may apply, see Line 34900 and Pamphlet P113, Gifts and Income Tax.

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