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AFP Testifies Before Canadian Finance Committee on Gifts of Land, Real Estate

(Sept. 25, 2006) AFP appeared before the Standing Committee on Finance on Thursday, Sept. 21, and called on Parliament to extend the exemption from capital gains tax to gifts of land and real estate.

Rob Peacock, president of Metanoia Canada in Toronto, represented AFP before the committee’s Pre-Budget Consultations, a series of annual hearings designed to elicit comments and opinions from groups across the country on what the priorities should be for next year’s budget.

During his comments, Peacock thanked the committee for their support of the elimination of the capital gains tax on gifts of securities, a provision that went into effect earlier this year. He then went to ask the committee to finish the job by expanding the provision to include gifts of land and real estate.

“The very same kind of principles and incentives involved in gifts of securities apply to gifts of land and real estate,” Peacock told the committee. “Unfortunately, the same kinds of barriers and obstacles that used to apply to gifts of securities still apply to gifts of land and real estate.”

No Trial Period

Before the capital gains tax was finally eliminated from gifts of securities to charity, the government enacted a five-year trial period with a reduced capital gains tax rate to see how the public would respond. However, Peacock stressed to the committee that no trial period would be needed to expand the provision to gifts of land and real estate, pointing to the success of the Ecological Gifts Program.

“The Ecological Gifts Program, under which gifts of ecologically sensitive land are donated to the government or a charity and exempt from capital gains tax, provides a model that can be expanded to any sort of land given to any type of charity, subject to proper valuation,” said Peacock.

In addition, Peacock reminded the committee that it had previously endorsed the recommendation two years earlier.

Private Foundations and NPD

AFP also gave its support to two other recommendations during its testimony:

  • Extending the eliminations of the capital gains tax for gifts of securities to private foundations
  • Creating a government-sponsored day to recognize and encourage philanthropy (National Philanthropy Day)

After his presentation, Peacock was asked about how the sector was working to ensure ongoing accountability. He noted that AFP’s Code of Ethical Principles and Standards of Professional Practice had been in place for more then four decades and that the association has been part of numerous projects to strengthen accountability and transparency in the sector.

“We’re very excited about the prospect of working with the government to see the capital gains exemption extended to gifts of land and real estate,” said Paulette Maehara, CFRE, CAE, president and CEO of AFP. “We will continue to serve as a leader on this issue, and I want to thank Rob Peacock for representing AFP during the consultations.”

A copy of AFP’s written testimony to the committee is available here.

The Finance Committee is expected to release its 2006 Pre-Budget Consultations report later this year.

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