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.
Background
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.
Relevant Law
- 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:
PRACTICE
D. No Assurances on Deductibility or Tax Benefits
The land trust does not make assurances as to whether a particular land or conservation agreement donation will be deductible, what monetary value of the gift the CRA and/or province will accept, what the resulting tax benefits of the deduction will be, or whether the donor’s appraisal is accurate.
Background
Landowners frequently want assurances that fee simple or conservation agreement donations will be considered deductible by the CRA and, especially early in a transaction, may want to know how large a tax benefit is likely as a result of their donation. Land trusts should be aware that not all donations may be considered gifts by CRA (donations required as part of development approvals, for example) and should seek advice accordingly. A land trust can provide general information and examples based on its experience, but should make it clear that the legal issues of deductibility and the value of donations are the responsibility of the landowner and his or her advisors. Due to their responsibilities for issuing charitable tax receipts, land trusts will also want to be confident about the value of gifts received and should access the necessary financial expertise to make these determinations.
