11 September 1997 External T.I. 9702375 - Whether "a change in use of land" a gift.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Whether change in use of land by land owner considered charitable gift?

Position:

No.

Reasons:

Change in use of land not a property and therefore not a gift.

970237

XXXXXXXXXX Wm. P. Guglich

Attention: XXXXXXXXXX

September 11, 1997

Dear Sirs:

Re: Change in the Use of Land

This is in reply to your letter of January 15, 1997, concerning a change in use of land to improve the water quality of a local reservoir and its upper water shed.

We understand that in order to implement the plan to improve the water quality, the landowners will be asked to change their use of land along the river. You consider this change in use of the land to be a donation by the land owner and requested our views as to whether it would be considered a charitable gift.

The term "gift" is not defined in the Income Tax Act and therefore assumes its common law meaning. In our view, a gift at common law is a voluntary transfer of property from a donor, who must freely dispose of his or her property to a donee who receives the property given. A change in use of land would not, in our view, be considered property and could not qualify as a gift.

You should note however, that ecological gifts, including a servitude for the use and benefit of a dominant land, a covenant or an easement, may be deducted by a corporation under subsection 110.1(1) of the Income Tax Act (the "Act") and in the case of an individual are included in "total gifts" for the year, under subsection 118.1(1) of the Act and qualify for a tax credit pursuant to subsection 118.1(3) of the Act. For your information, we are enclosing Interpretation Bulletin IT-110R3 which discusses ecological gifts in paragraph 2.

Environment Canada has prepared Information Circulars respecting ecological gifts. These Information Circulars may be obtained from:

Habitat Conservation Division
Canadian Wildlife Service
Environment Canada
Ottawa, Ontario
K1A 0H3

Fax: (819) 994-4445
Tel: (819) 953-0485

We trust our comments will be of assistance to you.

Yours truly,

C. Chouinard
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch