Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Marginal note:Deduction for gifts

• 110.1 (1) For the purpose of computing the taxable income of a corporation for a taxation year, there may be deducted such of the following amounts as the corporation claims

  • Marginal note:Charitable gifts

    (a) the total of all amounts each of which is the eligible amount of a gift (other than a gift described in paragraph (c) or (d)) made by the corporation in the year or in any of the five preceding taxation years to a qualified donee, not exceeding the lesser of the corporation’s income for the year and the amount determined by the formula

    0.75A + 0.25(B + C + D)

    where

    A

    is the corporation’s income for the year computed without reference to subsection 137(2),

    B

    is the total of all amounts, each of which is that proportion of the corporation’s taxable capital gain for the taxation year in respect of a gift made by the corporation in the taxation year (in respect of which gift an eligible amount is described in this paragraph for the taxation year) that the eligible amount of the gift is of the corporation’s proceeds of disposition in respect of the gift,

    C

    is the total of all amounts each of which is a taxable capital gain of the corporation for the year, because of subsection 40(1.01), from a disposition of a property in a preceding taxation year, and

    D

    is the total of all amounts each of which is determined in respect of the corporation’s depreciable property of a prescribed class and equal to the lesser of

    • (A) the amount included under subsection 13(1) in respect of the class in computing the corporation’s income for the year, and

    • (B) the total of all amounts each of which is determined in respect of a disposition that is the making of a gift of property of the class by the corporation in the year (in respect of which gift an eligible amount is described in this paragraph for the taxation year) equal to the lesser of

      • (I) that proportion, of the amount by which the proceeds of disposition of the property exceeds any outlays and expenses, to the extent that they were made or incurred by the corporation for the purpose of making the disposition, that the eligible amount of the gift is of the corporation’s proceeds of disposition in respect of the gift, and

      • (II) that proportion, of the capital cost to the corporation of the property, that the eligible amount of the gift is of the corporation’s proceeds of disposition in respect of the gift;

  • (a.1) [Repealed, 2017, c. 20, s. 9]

  • (b) [Repealed, 2014, c. 39, s. 29]

  • Marginal note:Gifts to institutions

    (c) the total of all amounts each of which is the eligible amount of a gift (other than a gift described in paragraph (d)) of an object that the Canadian Cultural Property Export Review Board has determined meets the criterion set out in paragraph 29(3)(b) of the Cultural Property Export and Import Act, which gift was made by the corporation in the year or in any of the five preceding taxation years to an institution or a public authority in Canada that was, at the time the gift was made, designated under subsection 32(2) of that Act either generally or for a specified purpose related to that object; and

  • Marginal note:Ecological gifts

    (d) the total of all amounts each of which is the eligible amount of a gift of land (including a covenant or an easement to which land is subject or, in the case of land in the Province of Quebec, a personal servitude (the rights to which the land is subject and which has a term of not less than 100 years) or a real servitude) if

    • (i) the fair market value of the gift is certified by the Minister of the Environment,

    • (ii) the land is certified by that Minister, or by a person designated by that Minister, to be ecologically sensitive land, the conservation and protection of which is, in the opinion of that Minister or the designated person, important to the preservation of Canada’s environmental heritage, and

    • (iii) the gift was made by the corporation in the year or in any of the 10 preceding taxation years to a qualified donee that is

      • (A) Her Majesty in right of Canada or of a province,

      • (B) a municipality in Canada that is approved by that Minister or the designated person in respect of the gift,

      • (C) a municipal or public body performing a function of government in Canada that is approved by that Minister or the designated person in respect of the gift, or

      • (D) a registered charity (other than a private foundation) one of the main purposes of which is, in the opinion of that Minister, the conservation and protection of Canada’s environmental heritage, and that is approved by that Minister or the designated person in respect of the gift.

• Marginal note:Limitation on deductibility

  (1.1) For the purpose of determining the amount deductible under subsection 110.1(1) in computing a corporation’s taxable income for a taxation year,

  • (a) an amount in respect of a gift is deductible only to the extent that it exceeds amounts in respect of the gift deducted under that subsection in computing the corporation’s taxable income for preceding taxation years; and

  • (b) no amount in respect of a gift made in a particular taxation year is deductible under any of paragraphs 110.1(1)(a) to (d) until amounts deductible under that paragraph in respect of gifts made in taxation years preceding the particular year have been deducted.

• Marginal note:Where control acquired

  (1.2) Notwithstanding paragraph 88(1)(e.6), if control of a particular corporation is acquired at any time by a person or group of persons,

  • (a) no amount is deductible under any of paragraphs (1)(a) to (d) in computing any corporation’s taxable income for a taxation year that ends on or after that time in respect of a gift made by the particular corporation before that time; and

  • (b) no amount is deductible under any of paragraphs (1)(a) to (d) in computing any corporation’s taxable income for a taxation year that ends on or after that time in respect of a gift made by any corporation on or after that time if the property that is the subject of the gift was acquired by the particular corporation under an arrangement under which it was expected that control of the particular corporation would be so acquired by a person or group of persons, other than a qualified donee that received the gift, and the gift would be so made.

• Marginal note:Proof of gift

  (2) An eligible amount of a gift shall not be included for the purpose of determining a deduction under subsection (1) unless the making of the gift is evidenced by filing with the Minister

  • (a) a receipt for the gift that contains prescribed information;

  • (b) in the case of a gift described in paragraph (1)(c), the certificate issued under subsection 33(1) of the Cultural Property Export and Import Act; and

  • (c) in the case of a gift described in paragraph (1)(d), both certificates referred to in that paragraph.

• Marginal note:Where subsection (3) applies

  (2.1) Subsection (3) applies in circumstances where

  • (a) a corporation makes a gift at any time of

    • (i) capital property to a qualified donee, or

    • (ii) in the case of a corporation not resident in Canada, real or immovable property situated in Canada to a prescribed donee who provides an undertaking, in a form satisfactory to the Minister, to the effect that the property will be held for use in the public interest; and

  • (b) the fair market value of the property otherwise determined at that time exceeds

    • (i) in the case of depreciable property of a prescribed class, the lesser of the undepreciated capital cost of that class at the end of the taxation year of the corporation that includes that time (determined without reference to the proceeds of disposition designated in respect of the property under subsection (3)) and the adjusted cost base to the corporation of the property immediately before that time, and

    • (ii) in any other case, the adjusted cost base to the corporation of the property immediately before that time.

• Marginal note:Gifts of capital property

  (3) If this subsection applies in respect of a gift by a corporation of property, and the corporation designates an amount in respect of the gift in its return of income under section 150 for the year in which the gift is made, the amount so designated is deemed to be its proceeds of disposition of the property and, for the purpose of subsection 248(31), the fair market value of the gift, but the amount so designated may not exceed the fair market value of the property otherwise determined and may not be less than the greater of

  • (a) in the case of a gift made after December 20, 2002, the amount of the advantage, if any, in respect of the gift, and

  • (b) the amount determined under subparagraph (2.1)(b)(i) or (ii), as the case may be, in respect of the property.

• Marginal note:Gifts made by partnership

  (4) If at the end of a fiscal period of a partnership a corporation is a member of the partnership, its share of any amount that would, if the partnership were a person, be the eligible amount of a gift made by the partnership to any donee is, for the purpose of this section, deemed to be the eligible amount of a gift made to that donee by the corporation in its taxation year in which the fiscal period of the partnership ends.

• Marginal note:Ecological gifts

  (5) For the purposes of applying subparagraph 69(1)(b)(ii), this section and section 207.31 in respect of a gift described in paragraph (1)(d) that is made by a taxpayer, the amount that is the fair market value (or, for the purpose of subsection (3), the fair market value otherwise determined) of the gift at the time the gift was made and, subject to subsection (3), the taxpayer’s proceeds of disposition of the gift, is deemed to be the amount determined by the Minister of the Environment to be

  • (a) where the gift is land, the fair market value of the gift; or

  • (b) where the gift is a covenant or an easement to which land is subject or, in the case of land in the Province of Quebec, a real or personal servitude, the greater of

    • (i) the fair market value otherwise determined of the gift, and

    • (ii) the amount by which the fair market value of the land is reduced as a result of the making of the gift.

• Marginal note:Non-qualifying securities

  (6) Subsections 118.1(13) to (14) and (16) to (20) apply to a corporation as if the references in those subsections to an individual were read as references to a corporation and as if a non-qualifying security of a corporation included a share (other than a share listed on a designated stock exchange) of the capital stock of the corporation.

• Marginal note:Corporation ceasing to exist

  (7) If, but for this subsection, a corporation (other than a corporation that was a predecessor corporation in an amalgamation to which subsection 87(1) applied or a corporation that was wound up in a winding-up to which subsection 88(1) applied) would be deemed by subsection 118.1(13) to have made a gift after the corporation ceased to exist, for the purpose of this section, the corporation is deemed to have made the gift in its last taxation year, except that the amount of interest payable under any provision of this Act is the amount that it would be if this subsection did not apply to the gift.

• (8) and (9) [Repealed, 2017, c. 20, s. 9]

• Marginal note:Options

  (10) Subject to subsections (12) and (13), if a corporation has granted an option to a qualified donee in a taxation year, no amount in respect of the option is to be included in computing an amount under any of paragraphs (1)(a) to (d) in respect of the corporation for any year.

• Marginal note:Application of subsection (12)

  (11) Subsection (12) applies if

  • (a) an option to acquire a property of a corporation is granted to a qualified donee;

  • (b) the option is exercised so that the property is disposed of by the corporation and acquired by the qualified donee at a particular time; and

  • (c) either

    • (i) the amount that is 80% of the fair market value of the property at the particular time is greater than or equal to the total of

      • (A) the consideration received by the corporation from the qualified donee for the property, and

      • (B) the consideration received by the corporation from the qualified donee for the option, or

    • (ii) the corporation establishes to the satisfaction of the Minister that the granting of the option or the disposition of the property was made by the corporation with the intention to make a gift to the qualified donee.

• Marginal note:Granting of an option

  (12) If this subsection applies, notwithstanding subsection 49(3),

  • (a) the corporation is deemed to have received proceeds of disposition of the property equal to the property’s fair market value at the particular time; and

  • (b) there shall be included in the total referred to in paragraph (1)(a), for the corporation’s taxation year that includes the particular time, the amount by which the property’s fair market value exceeds the total described in subparagraph (11)(c)(i).

• Marginal note:Disposition of an option

  (13) If an option to acquire a particular property of a corporation is granted to a qualified donee and the option is disposed of by the qualified donee (otherwise than by the exercise of the option) at a particular time

  • (a) the corporation is deemed to have disposed of a property at the particular time

    • (i) the adjusted cost base of which to the corporation immediately before the particular time is equal to the consideration, if any, paid by the qualified donee for the option, and

    • (ii) the proceeds of disposition of which are equal to the lesser of the fair market value of the particular property at the particular time and the fair market value of any consideration (other than a non-qualifying security of any person) received by the qualified donee for the option; and

  • (b) there shall be included in the total referred to in paragraph (1)(a) for the corporation’s taxation year that includes the particular time the amount, if any, by which the proceeds of disposition as determined by paragraph (a) exceed the consideration, if any, paid by the qualified donee for the option.

• Marginal note:Returned property

  (14) Subsection (15) applies if a qualified donee has issued to a corporation a receipt referred to in subsection (2) in respect of a transfer of a property (in this subsection and subsection (15) referred to as the “original property”) and a particular property that is

  • (a) the original property is later transferred to the corporation (unless that later transfer is reasonable consideration or remuneration for property acquired by or services rendered to a person); or

  • (b) any other property that may reasonably be considered compensation for or a substitute for, in whole or in part, the original property, is later transferred to the corporation.

• Marginal note:Returned property

  (15) If this subsection applies, then

  • (a) irrespective of whether the transfer of the original property by the corporation to the qualified donee referred to in subsection (14) was a gift, the corporation is deemed not to have disposed of the original property at the time of that transfer nor to have made a gift;

  • (b) if the particular property is identical to the original property, the particular property is deemed to be the original property; and

  • (c) if the particular property is not the original property, then

    • (i) the corporation is deemed to have disposed of the original property at the time that the particular property is transferred to the corporation for proceeds of disposition equal to the greater of the fair market value of the particular property at that time and the fair market value of the original property at the time that it was transferred by the corporation to the donee, and

    • (ii) if the transfer of the original property by the corporation would be a gift if this section were read without reference to paragraph (a), the corporation is deemed to have, at the time of that transfer, transferred to the donee a property that is the subject of a gift having a fair market value equal to the amount, if any, by which the fair market value of the original property at the time of that transfer exceeds the fair market value of the particular property at the time that it is transferred to the corporation.

• Marginal note:Information return

  (16) If subsection (15) applies in respect of a transfer of property to a corporation and that property has a fair market value greater than $50, the transferor must file an information return containing prescribed information with the Minister not later than 90 days after the day on which the property was transferred and provide a copy of the return to the corporation.

• Marginal note:Reassessment

  (17) If subsection (15) applies in respect of a transfer of property to a corporation, the Minister may reassess a return of income of any person to the extent that the reassessment can reasonably be regarded as relating to the transfer.