woods-stream-nature

As a young boy, Jim Little spent many hours observing wildlife near his grandparents’ land in Peace River Country in northern British Columbia. He especially liked to visit a nearby lake, which had waterfowl visitors such as Western Grebes, and rare plant species like the Calypso Orchid.

Many years later, in 1999, Jim and his wife, Margaret, purchased 52 hectares (128 acres) of land in the same area, including the lake, as well as wetlands, muskeg and mixed forest.

The Littles became deeply attached to this land. But they were concerned about protecting it for future generations.

Jim and Margaret decided to donate this ecologically sensitive land to the Nature Trust of British Columbia, a land conservation group in western Canada. Since 1971, the group, along with its partners, has invested more than $80 million to secure over 70,000 hectares (173,000 acres) across the province. The lake is now protected forever, and has been named “Little-Levin Lake” after Jim’s grandparents and parents.

The gift was made through the federal government’s Ecological Gifts Program (EGP). And even though saving on income tax was not a priority for Jim and Margaret, it was a bonus.

Tax benefits

The Income Tax Act provides favourable treatment for gifts of ecologically sensitive land, and partial interests in land through the EGP.

It was introduced in 1995 to encourage conservation of habitat and biodiversity across Canada. Since inception, people and companies have donated more than 1,057 ecological gifts, covering 151,014 hectares and valued at more than $635 million.

Landowners do not need to sever their connection with the land. Types of ecogifts donated to land trusts, charitable conservation organizations and government agencies include conservation easements, residual interests and full title.

Additional details include:

  • ecogift donations are not subject to the usual income limits (usually 75% of income) in calculating the income tax credit (for individuals) or deduction (for corporations);
  • ecogifts made after May 2, 2006 benefit from the elimination of the normal capital gain

realized on disposition of the property—currently 50% of the capital gain for non-certified gifts or sales of land is included in taxable income;

  • Environment Canada issues a Statement of Fair Market Value certifying the gift’s value after the gift is made, which the donor submits with the income tax return;
  • potential donors who want certainty about the value of their intended donation can request that Environment Canada issue a Notice of Determination of Fair Market Value before the donation is made;
  • Environment Canada reviews and approves charitable recipients to ensure such organizations are dedicated to protecting Canada’s natural heritage;
  • donors worried about their cherished lands can be confident that income tax penalties can be imposed on charitable and municipal recipients of ecogifts who dispose of title or make a change of use without Environment Canada’s prior authorization;
  • making an ecogift can help eliminate potential family disputes over what to do with the land following the death of the owner; and
  • an ecogift involving certain partial interests may reduce the property tax burden.

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