Post-Mortem Donations –
Legislative Changes and Their Impact
By Stephanie Yu, CPA, CA
Stephanie Yu, CPA, CA, is a
senior associate in the private
client services group at PwC in
Vancouver, specializing
primarily in corporate taxation
and estate planning for
high-net-worth (HNW)
individuals. She would like to
thank Colleen Reichgeld, CPA,
CA, a tax partner in PwC’s HNW
group, for providing valuable
input on this article.
Note to readers: Within the tax community, there has been some
controversy with respect to the new trust legislation enacted in 2014.
Accordingly, the author advises readers to remain alert to the possibility
of proposed changes in 2015/2016.
T
he Federal Budget of 20141 introduced several tax measures
that affect charitable donations and estate planning. The new
legislation applies to deaths after 2015, and strives to provide
greater flexibility for executors to use charitable donation tax credits
(DTC) from property donated on or after an individual’s death.
Current legislation
Donations made by will are deemed to have been made by the deceased individual immediately prior to death. The donation value is
determined as of the date of death, and the DTC may be claimed on
the terminal return or the immediately preceding return.2 Excess
DTCs cannot be claimed by the estate. The current rules rely heavily
on the CRA’s interpretation of the individual’s will to determine
whether the donation is claimed by the individual or the estate. A
mismatch between the taxpayer and/or the taxation year can result in
the inability to use the DTC to shelter the tax liability on death.
beneficiary of an RRSP, TFSA, RRIF, or death
benefit on the life insurance policy of the deceased, the donation will be deemed to have
been made by the estate and, therefore, will
be eligible for the new rules.8
Donations claimed on the terminal return
or on the prior-year return continue to be
100% eligible for the DTC, whereas the 75%
threshold continues to apply for donations
claimed by the estate.9 Gifts made by a trust
or an estate that is not a GRE may be claimed
by the trust and carried forward five years.
The new legislation also allows individuals
to claim donations made by their spouse.10
ill C-43 was introduced in the 2014
B
1
federal budget and received Royal Assent
on December 16, 2014. It will become
effective for deaths occurring after 2015.
ee subsections 118.1(4) and 118.1(5) of
S
2
Canada’s In