D23. What are the general principles on receipting of gifts of ecologically sensitive land?

D23. What are the general principles on receipting of gifts of ecologically sensitive land?


Short answer

Gifts of ecologically sensitive land to a municipal or public body performing a function of government in Canada qualify for favourable tax treatment. Corporate donors may deduct the amount of their ecological gifts (eco-gifts) directly from their taxable income, while the value of an individual’s eco-gift is converted to a non-refundable tax credit. Donors of eco-gifts also receive a reduction in the taxable capital gain realized on the disposition of the property.

There are a number of steps involved in this process, including

  • arranging the donation
  • preparing and filing information on ecological sensitivity
    and
  • determining the fair market value of the donation.
Long answer

In order to receive a gift of ecologically sensitive land, a registered charity must:

  • have as one of its primary purposes “the conservation and protection of Canada’s environmental heritage” or some similar statement acceptable to the federal Minister of the Environment
    and
  • apply to Environment Canada for eligibility.

In addition, before it can be included under the Ecological Gifts Program, a donation of land or a partial interest in land must be certified as ecologically sensitive, that is, important to the preservation of Canada’s environmental heritage. The federal Minister of the Environment or a designated authority carries out this certification.

The Minister—through the offices of an appraiser—will also ultimately determine the fair market value of the gift. For a gift of a covenant or an easement or, in Quebec, a real servitude, the fair market value of the gift will be the greater of:

  • the determined fair market value of the gift
    or
  • the amount of the reduction of the land’s fair market value that resulted from the gift.

The fair market value of the donated property, as determined by the Minister, will apply for a 24-month period after the last determination. When 24 months have elapsed, a re-determination is required. The last determined or re-determined value is the value a charity must use to calculate the eligible amount of the gift, whether the gift is claimed as a gift of ecologically sensitive land or as an ordinary charitable gift.

Donors may gift fee simple donations (comprehensive rights to the real property) or partial interests (any one or combination of lesser rights short of a fee simple donation). Whether fee simple donations or a donation of a partial interest in land, all owners have a responsibility to maintain the biodiversity and environmental heritage of these properties in perpetuity.

More...

For more information, visit the Ecological Gifts Program or contact the program’s National Secretariat at 1-800-668-6767.

In addition, a very detailed and helpful handbook is available.

Note

This is a complex area, so charities receiving gifts of ecologically sensitive land will benefit from professional help in sorting out related issues.