123 Tax credit for donations and gifts

The tax credit for donations and gifts must be calculated on the basis of the eligible amount of the gift or donation made by the trust shown on the official receipt.

Gifts made under a will

A gift made by will or by designation is deemed to be made by the succession at the time the property (or property substituted for the property) is transferred to the donee.

If a GRE (or a succession that ceased to be a GRE solely because it existed for more than 36 months after the death) makes a gift (or is deemed to have made a gift) within 60 months following the death, the gift can be:

• allocated to the deceased and included in their income tax return for the year of the death or the previous year;

• included in the income tax return of the GRE for the year of the transfer or a previous year; or

• included in the income tax return of a succession that was a graduated rate estate in the year of the transfer.

These rules apply if the deceased left the proceeds of an RRSP, a RRIF or a TFSA to a qualified donee under a will. They also apply if the deceased designated a qualified donee as the beneficiary of the proceeds of an insurance policy in Canada.

The tax credit for donations and gifts can be claimed in the deceased's income tax return for the year of death or in an income tax return for a preceding year, even if the gifted property has not yet been transferred to the qualified donee. In this situation, you will have to provide a copy of all of the following documents:

• the will;

• a letter from the succession to the charitable organization informing it of the gift and providing details and an estimated value of the property being gifted;

• a letter from the charitable organization acknowledging the gift and stating that it accepts it;

• a statement or letter from the succession's legal representative stating all of the following:

  • the succession is a GRE of the deceased individual and will be designating itself as such,

  • the succession intends to make the gift within 60 months after the date of death,

  • the succession intends to claim the tax credit for donations and gifts in the deceased individual's income tax return and not in the succession's return,

  • for future non-cash gifts, the value of the gift can be reasonably determined and supported.

Cultural patronage or large cultural donation made upon a death

It is presumed that a gift made by will or by designation is deemed to be made by the succession of the deceased individual at the time the property is transferred to a qualified donee. This presumption also applies to a donation that gives entitlement to the additional tax credit for a large cultural donation or the tax credit for cultural patronage. However, a succession cannot claim a tax credit for such donations.

A cultural patronage or large cultural donation made by a GRE within 36 months following the death can be used to reduce the income tax payable by the deceased individual for the year of the death or the previous year. The same goes for cultural patronage made within 60 months following the death by a succession that is no longer a GRE solely because it has existed for more than 36 months after the death.

Charitable donations

Charitable donations are donations made to qualified donees that are not gifts of cultural property, ecological gifts or gifts of musical instruments (refer to the instructions under "Other gifts" on page 85) The term "qualified donee" includes:

• a registered charity;

• a registered Canadian or Québec amateur athletic association;

• a corporation constituted exclusively for the purpose of providing low-cost housing accommodation for senior citizens;

• a registered cultural or communications organization;

• a registered Canadian municipality;

• the United Nations or one of its agencies;

• a registered foreign university whose student population normally includes Canadians;

• the Government of Canada or a provincial government;

• the Organisation internationale de la Francophonie or one of its subsidiaries;

• a registered museum;

• a registered municipality or public body performing a function of government in Canada;

• a recognized political education organization; and

• a recognized journalism organization.

Limit regarding the charitable donation of a work of art

If, during the taxation year, the trust donated a work of art, the value of the donation can be deducted as income allocated to the beneficiaries of the trust (line 81) or may qualify for a tax credit for donations and gifts (line 123), provided the donee sells the work of art on or before December 31 of the fifth year following the calendar year in which the donation was made. If the trust cannot take the donation into account at the time the return is filed because a receipt has not yet been issued, it can request an adjustment from us after obtaining the receipt using form TP-646. R-V, Request for an Adjustment to a Trust Income Tax Return.

The five-year time limit does not apply if the work of art was donated, in particular:

• to a registered museum, if the gift is cultural property;

• to a registered Canadian municipality, the Government of Canada or a provincial government or an organization that acquired the work as part of its primary mission;

• to a charity that is a recognized institution or establishment for the purpose of the 50% increase in the eligible amount of the donation, if the work of art is a public work of art (refer to the information below).

Increase in the eligible amount of a donation of a work of art

The eligible amount of a donation of a work of art can be increased by 25% if the work of art is donated to a Québec museum (museum in Québec or a registered museum).

However, if a trust makes a charitable donation to certain donees and the donated property is a public work of art, the eligible amount of the donation can be increased by 25% or 50%, as applicable. The trust must enclose with its return a certificate, issued by the Ministère de la Culture et des Communications, confirming the FMV of the public work of art.

The term "public work of art" means a permanent work of art, often large in size or of an environmental nature, installed in a space accessible to the public for the purposes of commemoration, embellishment or integration into the architecture or environment of public buildings and sites.

Thus, unless the 25% increase has already been applied because the work of art is a public work of art that was donated to a Québec museum, the eligible amount of the gift can be increased by 25% if the donee was:

• the Québec government (if the donee was an educational institution that is a mandatary of the State, refer to the following paragraph);

• a Québec municipality or a registered municipal or public body performing a function of government in Québec (other than a school service centre governed by the Education Act) and, according to the certificate issued by the Ministère de la Culture et des Communications, the work was acquired by the municipality or body in accordance with its acquisition and conservation policy for public works of art.

The eligible amount of a donation of a public work of art can be increased by 50% if the donee was:

• an educational institution that is a mandatary of the State;

• a school service centre governed by the Education Act or by the Education Act for Cree, Inuit and Naskapi Native Persons;

• a registered charity whose mission is education and that is:

  • an educational institution established under a Québec statute, other than an educational institution that is a mandatary of the State,

  • a general and vocational college (CEGEP),

  • a university-level institution referred to in one of paragraphs 1 to 11 of section 1 of the Act respecting educational institutions at the university level, or

  • an accredited private educational institution for the purposes of the grant under the Act respecting private education.

In this case, the certificate issued by the Ministère de la Culture et des Communications must also confirm that the work of art acquired by the donee will be installed in a place that is accessible to the students and that its conservation can be assured.

Increase in the eligible amount of a gift of an immovable intended for cultural purposes

If a trust makes a gift of a building located in Québec capable of housing artists' studios or one or more cultural organizations, the eligible amount of the gift can be increased by 25%. The trust must enclose with its return the following documents issued by the Ministère de la Culture et des Communications: an eligibility certificate for the building and a certificate confirming the FMV of the building (including the value of the land on which the building is located). The gift must have been made to one of the following donees:

• a Québec municipality or a registered municipal or public body performing a function of government in Québec;

• a registered charity operating in Québec for the benefit of the community, such as the Société d'habitation et de développement de Montréal, or operating in the area of arts or culture;

• a registered cultural or communications organization;

• a registered museum.

Amount of charitable donations and carry-over of the unused portion

The total eligible amount of charitable donations gives entitlement to the tax credit. The charitable donations to be taken into account are those made by the trust during the taxation year concerned and the previous five taxation years, provided the trust has not already claimed a tax credit in the income tax return for the year or a previous year or, if the trust is a succession, in the income tax return of the deceased for the year of death or the previous year.

The trust may choose to claim only a portion of its total donations (to the maximum amount allowed). The unused portion can be carried forward five years.

Other gifts

The table below shows the other gifts for which the trust can claim a tax credit.

Increase in the eligible amount of a gift of cultural property

If the trust makes a gift of cultural property that is a work of art or an immovable to be used for cultural purposes, the eligible amount of the gift can be increased by 25%, as is the case with charitable donations. Eligible donees and the documents to enclose with the return are listed in the table above.

Gift of property with undeniable ecological value

Since March 22, 2017, the following rules have applied to gifts of property with undeniable ecological value:

• The municipalities and municipal or public bodies performing a function of government that receive such a gift must prove to the Ministère de l'Environnement, de la Lutte contre les changements climatiques, de la Faune et des Parcs that the gifts received will be protected in the long-term.

• Private foundations are no longer authorized to receive gifts of property with undeniable ecological value.

• Certain gifts of personal servitudes are considered gifts of property with undeniable ecological value, provided they meet certain conditions (for example, the personal servitude must have a term of not less than 100 years).

Carry-over of the unused portion

The total eligible amount of other gifts gives entitlement to the tax credit for donations and gifts. This total can include gifts made by the trust during the taxation year and gifts made in the previous five years, provided the trust has not already claimed a tax credit for those gifts.

The trust can choose to claim only a portion of its total gifts. The unused portion can be carried forward five years (ten years in the case of an ecological gift made after February 10, 2014). Refer to the carry-over rules for donations, which also apply to gifts of ecological property made by a GRE.