Bill C-240 proposes changes to the Income Tax Act regarding donations of private corporation shares or real estate to charities. The main goal is to provide an exemption from capital gains tax when individuals or their estates donate these types of properties to qualified charities.
The bill introduces new rules around how capital gains are calculated when such donations occur. If specific conditions are met, the taxable capital gain from the donation can be reduced to zero. These conditions include the donation being made to an eligible charity within a certain timeframe after the property is sold, and that the sale is an arms-length transaction.
The bill also includes a formula to determine the portion of the capital gain that qualifies for the zero-tax rate, taking into account the amount of the donation, any advantages received in return for the donation, and the proceeds from the sale of the property. There are also measures to prevent abuse of this exemption, such as rules that trigger a reversal of the capital gain exemption if the donor or a related party reacquires the property within a certain period.
These amendments apply to the 2022 and later tax years. Overall, the bill aims to encourage charitable giving by reducing the tax burden associated with donating private corporation shares or real estate.
Taxation
Bill C-240 modifies the Income Tax Act by introducing a capital gains tax exemption for donations of private corporation shares or real estate to qualified charities. This means that if certain requirements are satisfied, the taxable capital gain from such a donation can be reduced to zero, potentially lowering the donor's overall tax liability. The bill includes specific formulas for calculating the tax benefit, and also includes measures intended to prevent abuse of the exemption.