2018-0758611E5 Charitable gift annuity and 60(l) rollover

Principal Issues: Whether a charitable gift annuity issued by a registered charity would be eligible for a tax-deferred rollover under paragraph 60(l)?

Position: No.

Reasons: The registered charity is not a person licensed or otherwise authorized under the laws of Canada or a province to carry on an annuities business in Canada as required by subparagraph 60(l)(ii).

Author: Doiron, Wayne
Section: 60(l)(ii)

XXXXXXXXXX                                                                                                                                     2018-075861
                                                                                                                                                             W. Doiron
August 13, 2019

Dear XXXXXXXXXX:

Re:  Eligibility of charitable gift annuity for 60(l) rollover

This is in reply to your letter of March 28, 2018 in which you ask whether a charitable gift annuity issued by your organization would be eligible for a tax-deferred rollover under paragraph 60(l) (footnote 1). We also acknowledge the additional information provided by letter and telephone. We apologize for the delay in our response.

We understand that your organization is a registered charity. It is authorized in its incorporating documents to issue charitable gift annuities. However, it is not licensed or specifically authorized under any federal or provincial law to carry on an annuities business in Canada. No provincial regulatory bodies have taken any action to prohibit your organization from issuing charitable gift annuities.

Our comments

This technical interpretation provides general comments about the provisions of the Income Tax Act and related legislation (where referenced).  It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination.  The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R9, Advance Income Tax Rulings and Technical Interpretations.

In general terms, paragraph 60(l) allows an individual to deduct specified amounts of retirement income if the amounts are used to acquire, among other things, certain annuities as described in subparagraph 60(l)(ii).  One of the requirements of subparagraph 60(l)(ii) is that the annuity must be purchased from a person licensed or otherwise authorized under the laws of Canada or a province to carry on an annuities business in Canada.

In our view, your organization does not satisfy this requirement.  Consequently, a charitable gift annuity issued by your organization would not be eligible for the rollover under paragraph 60(l).

The Canada Revenue Agency is responsible for administering the tax system and applying current legislation, whereas the Department of Finance is responsible for developing tax policy and legislation.  If you wish to pursue a legislative change, we suggest that you contact the Department of Finance.

We trust our comments will be of assistance.

Yours truly,

Dave Wurtele
Section Manager
for Division Director
Financial Industries and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

FOOTNOTES

Note to reader:  Because of our system requirements, the footnotes contained in the original document are shown below instead:

1  Unless otherwise stated, all statutory references in this letter are references to the provisions of the Income Tax Act (the “Act”).

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