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What Is an EcoGift?
EcoGift - the term brings up images of biodegradable knick-knacks made from reused post-consumer waste by a worker-owned co-op working out of a straw bale constructed production center powered by passive solar and a methane digester. However, in Canada, the term “EcoGift” has a special meaning that is good news for conservation and habitat protection.
In 1995, the Federal Government introduced the Ecological Gift Program to allow taxpayers to receive federal and provincial tax credits for donations of ecologically sensitive lands, or conservation easements on such lands, to qualified conservation organizations.
What Qualifies as an EcoGift?
Donations of certain kinds of land or conservation easements to qualified recipients can qualify as Ecogifts. Each province has an agreement with the federal government that defines the criteria for Ecogifts located in the province. In Ontario, the criteria are quite broad, including threatened and endangered species habitat; significant wetlands; Areas of Natural and Scientific Interest (ANSI’s); Niagara Escarpment Protection Areas; Niagara Escarpment Natural Areas; locally or regionally designated Environmentally Sensitive Areas; lands within or adjacent to Areas with protected status such as National and Provincial Parks or Wildlife Areas, Conservation Areas and even some municipal parks. The Ontario criteria also include significant woodlands or water bodies; significant wildlife habitat or areas of high concentration of wildlife; natural links, corridors or buffers; areas with potential for enhanced ecological values through restoration or remediation, etc. With such broad criteria, most lands that would be of interest to conservation groups will qualify as Ecogifts.
Income Tax Benefits
Initially Ecogifts were treated similarly to other charitable donations with the exception that there were no limits on how much of the donation receipt donors could use as a credit against earned income. Gifts of property or easements were still subject to full federal capital gains tax. As a result relatively few donors participated in the program since, in many cases, much of the tax benefit gained from making the gift was taken away by the capital gains payable. Conservation groups and concerned individuals, made presentations to the government to persuade it to reduce or eliminate the capital gains on Ecogifts. They argued that such gifts were at least as important a contribution to preserving Canada’s heritage as gifts of designated cultural property, which had been capital gains tax exempt for many years.
In the 2000 budget, the government responded by halving the capital gains rate for Ecogifts. At the same time, they reduced the inclusion rate for all capital gains from 75% to 2/3. This meant that donors only had to pay tax on one-third of the increase in value of the land or easement from the time they acquired it to the date of the donation. This change greatly enhanced the tax benefits of Ecogifts for most potential donors. At the same time, the government brought in new requirements for appraisals of EcoGift donations. In the fall of 2000 mini-budget, the government reduced the overall capital gains rate to 50%, meaning that only 25% of any capital gain related to an EcoGift is now taxable. This reduced capital gains rate has spurred donor interest in Ecogifts.
Who is a Qualified Recipient?
The Federal and provincial governments and crown agencies, municipalities and qualified conservation charities or Conservation Authorities all qualify.
The Blue Mountain Watershed Trust Foundation has applied to Revenue Canada and is an approved recipient able to issue tax receipts for Ecogifts.
For more information about the Ecogifts program visit the program web site at http://www.cws-scf.ec.gc.ca/habitat/Ecogifts.
2003 Updates:
Conservation Easement Regulations have been updated by the Province of Ontario. Regulation 293/03 extends the definition of which organizations can hold conservation easements under the Conservation Land Act. This means that, for U.S. residents who want to put a conservation easement on their Canadian lands and receive U.S. tax benefits, the regulations now exist that will allow the BMWTF to work with certain U.S. conservation groups to facilitate this process.
Conservation Easements as Ecological Gifts is a new fact sheet that provides basic information about the land conservation option of donating a conservation easement as an ecological gift. For your free copy, contact the BMWTF at bmwt@bmts.com.
Split-Receipting: On December 4, 2002, the Canada Customs and Revenue Agency (CCRA) released Proposed Guidelines on Split-Receipting (Income Tax Technical News No. 26); www.ccra-adrc.gc.ca/E/pub/tp/itnews-26/itnews-26-e.pdf. These guidelines relate to proposed amendments to The Income Tax Act. Basically, donors can now receive an advantage (such as cash) and a donation receipt for the difference between the value of the property and the advantage received.
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1-By Allan Ernest, an environmental planner and a conservation land securement and valuation specialist. Published in The Ontario Nature Trust Alliance “Forum”, March 2001. Note: The Ontario Nature Trust Alliance has now changed its name to Ontario Land Trust Alliance. |
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