Donation of ecological or cultural property – timing is everything: Lessons from Yellow Point Lodge Ltd. v. Canada, 2020 FCA 195 (CanLII)

January 15, 2021 | Troy McEachren

The recent Federal Court of Appeal (FCA)  decision in Yellow Point Lodge Ltd. v. Canada, 2020 FCA 195 (CanLII) (Yellow Point) is a reminder that timing can be everything when making donations of ecologically sensitive land or Canadian cultural property.

Both of the Income Tax Act (Canada) (ITA) and the Taxation Act (Quebec) (TA) provide significant benefits for the donation of qualifying ecologically sensitive land or Canadian cultural property. First, the taxable capital gain that is triggered by the donation of the property is equal to zero. Second, the resulting charitable donation receipt can be used against 100% of net annual income of the donor rather than the 75% limit that normally applies to charitable donations. Third, the Minister of the Environment or the Canadian Cultural Property Export Review Board, as the case may be, certify the value of the gift. But like all charitable donations, any receipt that is issued can only be used for the year that the gift is made and for a limited number of future years (generally 5 years) although in 2014 Parliament extended the future use of a donation receipt for ecologically sensitive land to 10 years.

In Yellow Point, the question for the court was when the clock starts running for the use of an enhanced charitable donation receipt. Was it from the date of the donation or was it from the date the Minister of the Environment confirmed the property in question was ecologically sensitive land? While the decision only dealt with the donation of ecologically sensitive land, its reasoning is equally applicable to the donation of Canadian cultural property.

Typically, there is delay of several months or longer between the donation of ecologically sensitive land and the issuance by the Minister of his or her certification. This could mean that a donation occurs in one taxation year but the certification is only issued in the following taxation year. The ITA and the TA both contemplate that a donor may refile tax returns of the year when a gift is made in order to claim the enhanced donation benefits.

The FCA in Yellow Point confirmed that a disposition takes place when ownership of the gifted property is transferred from the donor to the donee under the common law or the civil law, as applicable. The appellant argued unsuccessfully that the provisions of the ITA on the donation of ecologically sensitive land carved out an exception to this rule. Although the gifted property was disposed of in 2008, the appellant argued that applying a purposive analysis of the relevant provisions the gift was not made until the subsequent year when the required certificates and the appropriate receipts were filed with the CRA.

The appellant’s argument was made more difficult as it refiled its 2008 income tax returns and claimed that the taxable capital gain resulting from the gift was zero but then argued that for the purposes of carrying forward the donation receipt, the donation only occurred in 2009 when the Minister issued the certification. The Court did not agree, essentially holding that such a conclusion amounted to approbating and reprobating. Under the ITA, the question as to when a gift is made is distinct from when a gift qualifies for the enhanced deduction or exemption.

If timing is of concern in the context of a donation of environmentally sensitive land or of cultural property, donors should considering making the donation in the early part of a year to provide the Minister or the Canadian Cultural Property Export Review Board (CCPERB) sufficient time to issue the certification. Donors could also consider requesting advanced certification of a proposed disposition and then completing the donation once the certification is received.


This publication is provided as an information service and may include items reported from other sources. We do not warrant its accuracy. This information is not meant as legal opinion or advice.

Miller Thomson LLP uses your contact information to send you information electronically on legal topics, seminars, and firm events that may be of interest to you. If you have any questions about our information practices or obligations under Canada's anti-spam laws, please contact us at

© 2022 Miller Thomson LLP. This publication may be reproduced and distributed in its entirety provided no alterations are made to the form or content. Any other form of reproduction or distribution requires the prior written consent of Miller Thomson LLP which may be requested by contacting