17 March 1999 External T.I. 9827095 - CULTURAL PROPERTY & ECOLOGICAL 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 ISSUE:

Whether a land designated to be a wetland can be donated as an ecological gift and a certified cultural property.

Position TAKEN:

Maybe as an ecological gift but not as a certified cultural property.

REASON FOR POSITION TAKEN:
	The land is not a movable property.  Therefore, it cannot be a certified cultural 	property.

XXXXXXXXXX 			5-982709
L. J. Roy, CGA
March 17, 1999

Dear Sir:

Re: Charitable Gifts

This is in reply to your letter of October 14, 1998, wherein you requested an interpretation regarding the donation of a land designated to be a wetland. It is your view that the gift could be made either as a certified cultural property or as an ecological gift.

The Income Tax Act (thereafter the “Act”) provides favorable income tax treatment for the disposition of an object that the Canadian Cultural Property Export Review Board has determined meets the criteria set out in paragraphs 29(3)(b) and (c) of the Cultural Property Export and Import Act (thereafter “CPEIA”) to institutions and public authorities designated under subsection 32(2) of the CPEIA.

Subparagraph 39(1)(a)(i.1) of the Act excludes from a taxpayer’s capital gain, the disposition (sale or gift) of certified cultural property to a designated cultural institution. However, a taxpayer will be entitled to deduct capital losses on such a disposition within the limits provided in the Act. Also, for the purpose of section 118.1 of the Act, gifts of certified cultural property are not subject to an income limitation.

To benefit from these measures for tax purposes, a taxpayer must obtain from the Canadian Cultural Property Export Review Board, a certificate establishing that the property meets all of the criteria set out in paragraph 29(3)(b) and (c) of the CPEIA. In that respect, a certified cultural property is a movable property of outstanding significance and national importance to Canada and may be anything from paintings and sculptures to books and manuscripts to ethnological and decorative art material. However, it does not include land.

Regarding an ecological gift, it must be a land that is certified by the Minister of the Environment, or a person designated by the Minister, to be ecologically sensitive land, the conservation and protection of which is, in the opinion of the Minister, or that person, important to the preservation of Canada’s environmental heritage.

As for gifts of cultural property, gifts of ecologically sensitive land are not subject to an income limitation for the purposes of section 118.1 of the Act. However, the gain created by the disposition of such land is not excluded from the taxpayer’s capital gain under subsection 39(1) of the Act.

Amendments to the Act are the responsibility of the Minister of Finance. Consequently, if you wish to make any representation regarding the inequity that you believe exist in connection with the treatment of gain on disposition of cultural property versus an ecologically sensitive land, we suggest the you communicate your concern directly to the Minister of Finance.

The foregoing opinions are not rulings and in accordance with the guidelines set out in IC 70-6R3 they are not binding on Revenue Canada.

We trust the above comments will be of assistance to you.

Manager
Financing and Plans Section
Financial Industries Division
Income Tax Rulings
and Interpretations Directorate
Policy and Legislative Branch