Government
removed tax
impediments
for U.S. donors
Conservation
Continued From Page 10
Land Trusts (AFoCLT). This
U.S.-based trust was created to
enable American residents,
who have little or no Canadian
income, to receive tax benefits
in the U.S. for donations of
Canadian real property for conservation purposes. This
removed one of the largest
impediments to Americans
donating Canadian land – the
lack of any tangible tax benefit
for the donor.
“We can expect to see
a noticeable increase
in cross-border land
donation.
Together we have all the tools
Another significant tax
impediment was also recently
removed by the Canadian government. Previously, the property would be deemed to have
been transferred by the U.S.
donor at fair market value. This
would create significant Canadian capital gains tax issues for
the U.S. donor. Transfers to a
Canadian trust would likely
have allowed the donor to avoid
this tax, provided the trust was a
“prescribed donee” under the
Income Tax Act.
The recent tax change names
AFoCLT as a “prescribed donee”
and allows the U.S. donor to
elect to have the transfer deemed
to have been done at a reduced
value, removing the capital
gains tax issue. As a result of
these advances, we can expect to
see a noticeable increase in
cross-border land donation.
Real property practitioners
should have no trouble dealing
with these issues, should they
arise, but particular attention
should be paid to the applicable
provincial statutes.
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Allen Campbell is an associate with Boyne Clarke LLP in
Dartmouth, Nova Scotia and
practises primarily in real
property law. He has extensive
experience working with the
Nova Scotia Nature Trust and
conservation-minded landowners.
HAPPY HOLIDAYS
Please note that the next issue of The Lawyers Weekly returns January 14, 2011.
