Standard 10: Tax Consequences
The land trust works diligently to see that every charitable gift of land or conservation agreements meets federal and provincial tax law requirements.
As the beneficiary of the tax receipt, the landowner, not the land trust, has the primary responsibility to comply with the specific requirements regarding federal or provincial tax deductions for the donation of land or conservation agreements. Nevertheless, land trusts have a responsibility to see that those requirements are met and should take reasonable measures to ensure that landowners understand those requirements and consult their own advisors about meeting them. The land trust’s role is important in that deductions that are overturned by the Canadian Revenue Agency may make future potential donors wary of working with land trusts, could lead to investigations of the land trust and, ultimately, can reduce public support for deductions as incentives for land conservation. A land trust must take care never to guarantee or appear to guarantee that a deduction will be allowed or what its value will be, but the land trust can help guide the landowner and establish policies to protect the land trust.
- Income Tax Act, SC 1985, c. I, s. 149.1 (6.3);
see also Canada Revenue Agency policy interpretations at
- Property Law Act, RSBC 1996, c. 377, s. 35.
- Land Title Act, RSBC 1996, c. 250, s. 218-223.
- Canada Revenue Agency policy interpretation of Income Tax Act, SC 1985, c. I; see:
A. Independent Legal and Tax Advice
The land trust advises (in writing) potential land or conservation agreement donors to get independent legal, financial and tax advice before completing any transactions. The land trust notifies potential donors that there may be negative tax consequences to their donation including capital gains or pension claw backs that should be investigated by the donor's lawyer and accountant.
Even in instances where land trust staff or volunteers have relevant legal or tax knowledge, land trust representatives should advise landowners to obtain independent tax and legal advice to avoid misrepresentation and conflict of interest. Land trust staff should discuss the possible implications of a landowner's donation that may help the landowner in those discussions with tax and legal professionals. Land trusts should be careful to notify landowners about potential tax consequences, without offering specific tax or legal advice. Given the specialization of expertise required, and if requested by the landowner, land trusts may provide a list of tax and legal professionals who have expertise that can assist the landowner. However, land trusts should avoid recommending individual professionals.
CLTA Assessment Questions
- Does the land trust notify potential donors in writing to get independent legal, financial and tax advice?