Donations Involving Shares of Private Corporations or Real Estate
Commencing after 2016, the 2015 Federal Budget provides an exemption from capital gains tax in respect of certain dispositions of private corporation shares or real estate. The exemption will be available when:
- cash proceeds received from the disposition are donated to a qualified donee within 30 days after the disposition, and
- the disposition was to a purchaser that dealt at arm’s length with both the donor and the donee
The exempt portion of the gain will be based on the proportion that the cash proceeds donated is of the total proceeds from the disposition.
Anti-avoidance rules will apply to reverse the exemption when, within five years from the date of disposition, the donor or a person that does not deal at arm’s length with the donor:
- reacquires any property that had been sold
- in the case of shares, acquires shares substituted for the shares that had been sold, or
- in the case of shares, those shares are redeemed and the donor does not deal at arm’s length with the corporation at that time
Source: PWC Tax Insights – Issue 2015-26
For more detailed information on Budget 2015 and the changes relevant to charities and the sector, see the Miller Thomson Charities and Not for Profit Newsletter.