Bequests

A REVIEW

A bequest to the Diocese or a parish is the donation of a specific asset or part or all of one’s estate, which is ordinarily provided for in one’s will.  The income tax credit for the donation can be claimed in the donor’s terminal income tax return and the return of the previous taxation year.  Because of the taxation years where the credit can be claimed, care should be taken to make sure the maximum credits can be claimed.

Donations via a bequest can be claimed to 100% of net income.

A bequest does not give the church use of the donation until the property is transferred to it.  On the other hand, the deceased maintains full control and use of the asset until his/her death and also has the ability to change his or her will to alter the bequest.

Depending on the property being left to the church, there could be income tax implications to the deceased depending on any gain or loss realized on the deemed disposition of the asset in the deceased’s final tax return.

Example 1

Donation: $20,000
Federal & P.E.I. tax credits: $9,098
Net cost of donation: $10,902

Example 2

Donation of property worth $30,000 with a cost of $20,000 (see memo on listed securities if these are being donated)

Donation of property: $30,000
Federal & PEI tax credits: $13,668
Tax on capital gain: $2,369*
Net income tax reduction: $11,299

NOTE:  The tax on the gain would be payable irrespective of the donation.