Most people who donate through the Ecological Gifts Program do not do so for financial reasons. However, as an incentive to take part--and to assist those who could not otherwise afford to donate--the Income Tax Act provides favourable income-tax treatment for gifts of ecologically sensitive land and partial interests in land. In Quebec, there are also provincial tax benefits under the Quebec Taxation Act. The benefits of ecological gifts can thus be significant when the federal and provincial tax benefits are combined.
Specific tax benefits include:
- Corporate donors may deduct the amount of their ecological gift directly from their taxable income, while the value of an individual’s ecological gift is converted to a non-refundable tax credit. The tax credit is calculated by applying a rate of 15 per cent to the first $200 of the donor’s total gifts for the year and 29 per cent to the balance.
- In most provinces, a reduction in federal tax payable will also reduce provincial tax.
- Unlike other charitable gifts, there is no limit to the total value of ecological gift donations eligible for the deduction or credit in a given year.
- Any unused portion of the donor's gifts may be carried forward for up to five years.
- Donors who dispose of capital property, such as land, may realize a capital gain--a portion of which is taxable--where the deemed proceeds of disposition exceed the property’s adjusted cost base (usually the original purchase price of the land). This is generally the amount by which capital property appreciates in value while it is in the owner’s possession. While for most gifts the taxable portion is 50 per cent of the capital gain, in the case of an ecological gift is reduced to 0.
Donations of inventory land
Unlike capital property, inventory land is land that has been acquired for resale by a corporation for business purposes (as an example, lands owned by a developer and intended for sale). If they meet the criteria and requirements of the Income Tax Act, inventory lands may qualify under the Ecological Gifts Program. However, such gifts are not subject to the same tax benefits. For more information, please contact the Canada Revenue Agency.
More detailed information on the tax benefits of the Ecological Gifts Program can be found in Donation and Income Tax Scenarios.
Please note that the information on this website and the tax scenarios publication are provided for general information only. All donors are strongly advised to obtain independent tax and legal advice when considering donating an ecological gift.
Finance Canada has released proposed amendments to the Income Tax Act that include provisions for split-receipting. These provisions allow a donor to give a gift to a qualified recipient when the gift is only a portion of the entire transaction. In return, the donor receives a receipt for income-tax purposes for the value of the property transferred to the recipient, minus the value of the item or benefit given to the donor in return.
Although the proposed amendments to the Act are not yet in force, split-receipting is now generally permitted if the following conditions are met:
- the donor voluntarily transfers ownership of the property to a qualified recipient;
- there is clear intent by the donor to enrich the recipient;
- the value of the property and the value of any advantage obtained by the donor in making the gift have been clearly ascertained; and
- the value of the advantage does not exceed 80 per cent of the fair market value of the transferred property.
See the Program’s fact sheet Confirmation that Ecogifts are Eligible for Split-Receipting for more information.
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