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UPDATE on Private Shares, Real Estate & Donations: Changes Proposed by Bill C-240

Charity law and policy | , , , , , , , ,

UPDATE on Private Shares, Real Estate & Donations: Changes Proposed by Bill C-240

Earlier this year we let you know about Bill C-240, the Supporting Canadian Charities Act. Bill C-240 was voted down at second reading. This private member’s bill would have amended the Income Tax Act to waive capital gains tax on the arm’s-length sale of private shares or real estate when the proceeds of the sale are donated to a charity.

Bill C-240 Voted Down

Bill C-240 was voted down at second reading.

There was a divide in the House of Commons: the minority government and its supporting party voted against the bill (with a couple exceptions), while members from the other three opposition parties voted for the bill.

The government argued that Bill C-240 would “undermine the effectiveness of the tax incentives provided under the ecological gift program”; that it was “expected to be costly”; that it “would certainly increase the pressure on government to also provide special exemptions for donations of other types of property, such as virtual currency or cash gifts made after tax income.” Its supporting party took similar positions.

Other opposition MPs supported the purpose of the bill but had some questions about effectiveness and fairness that could be examined by the Finance Committee. The MP who introduced the bill highlighted “broad stakeholder support” for the Bill and asked the House to move it to committee to closely examine the proposal. A committee can answer detailed questions, hear from expert witnesses, and make recommendations for improvement.

But this bill will not go to committee for examination – it has died, or been ‘negatived’ by the vote at second reading.

What’s Next?

This is the second time this bill has been introduced. In November 2020, it’s predecessor Bill C-256 was introduced but when the election was called, the bill died. Similar legislation was introduced in 2015 but was never enacted. It’s likely that at some point in the future we will see a new version of this bill introduced. Depending on the composition of the government at the time, it could come in the form of a government bill, or perhaps will be another private members’ bill. It could also start in the Senate, as we saw with Bill S-216.

What Would Bill C-240 Have Changed?

Capital gains tax on arm’s-length sales of private shares or real estate would have been reduced to zero if listed conditions were met. Some of those conditions included:

  • that the gift is made within 30 days after the disposition
  • that any advantage received is accounted for
  • that the purchaser is at arm’s length to both the taxpayer and the charity

For More…

On some of the background information and CCCC’s view on Bill C-240 see Private Shares, Real Estate & Donations: Changes Proposed by Bill C-240.

Noteworthy is provided for general information purposes and does not constitute legal or professional advice. Every organization’s circumstances are unique. Before acting on the basis of information contained in this blog, readers should consult with a qualified lawyer for advice specific to their situation.

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