ELIGIBLE CHARITABLE EXPENSES EXPANDED

The recent federal budget changed regulations related to the taxability of capital gains on property that is donated to eligible charities. Several years ago, the federal government amended the tax act to encourage people to donate shares in public companies to their favourite charities. A taxpayer receives a charitable
donation receipt for the market value of the shares donated to the charity, but does not have to pay tax on any gains on the shares if they have increased in value  since they were originally purchased. The federal government is now expanding this regulation to eliminate tax on capital gains that arise on the donation of real estate or private company shares.
In order for the disposition to be tax free, the following guidelines must be met:
• The seller must donate the proceeds received from the sale of the property, rather than donating the property itself.
• The seller must make the donation within 30 days of the sale.
• The purchaser must be at arm’s length (not related) to both the donor and the qualified donee.
• The disposition has to occur after 2016.
• The seller cannot buy back the land or shares within 5 years of the disposition. Note that in many instances, the sale of real estate or private company shares may have already held special taxation status if the property had qualified for the capital gains exemption on its disposition.