The Canada Revenue Agency was recently asked to confirm whether, for a gift of ecologically sensitive land, the full amount of the capital gain realized by the corporation would be added to the corporation’s capital dividend account.
Normally, the amount added to a corporation’s capital dividend account on a disposition is the difference between the capital gain realised by the corporation and the taxable portion of that capital gain. For certain charitable gifts, including gifts of ecologically sensitive land, certified cultural property and publicly-traded securities, the capital gain inclusion rate is zero. There is therefore a double benefit to making such gifts because, in addition to a charitable tax deduction, for a corporation, or credit, for an individual, capital gains tax on the disposition is avoided.
Make that a triple benefit, where the gift is made by a corporation. The Canada Revenue Agency confirmed that with such gifts, the full amount of the capital gain realised by the corporation from its disposition of the gifted property is added to the capital dividend account. This allows additional designated capital dividends to be paid out to shareholders on a tax-free basis.
On a non-tax note, a news story has surfaced which provides an interesting example of “reaching beyond the grave”. A woman in Calgary is attempting to have her 1970’s home designated as an historical property. This designation would prevent the razing of the house or any changes to its interior or exterior following her death. The notion of a 1970’s home being deemed “historical” may strike many as strange (particularly if one was born mid-century). However, the house itself is spectacular. For a fun break, check out these photos.