Donating Land for Significant Tax Breaks


donating land

Forest Fire - Kilder Forest Drive © by Gary Robson.

Many acres of ecologically sensitive land belong to individual Canadian owners, and often they wish to protect this land for future generations. This goal is actually supported by the government, through Environment Canada’s Ecological Gifts Program. This allows Canadians to protect their land and leave a valuable legacy by donating land for conservation.

According to Environment Canada, to date there have been 912 ecological gifts made, representing 141,000 hectares of wildlife habitat, valued at more than $575 million. Land can be donated to Canada, a province or territory, a municipality or a registered charity approved by the Minister of the Environment.

Donating Land – Valuation

The actual value of a donation is determined by the Minister of the Environment based on Fair Market Value (FMV), and this figure can then be claimed as a charitable donation. And unlike other donations, the gift of ecologically sensitive land is not limited to a percentage of your net income. The entire amount can be claimed in one year, if you have enough income.

However, not every piece of land qualifies. The Minister of the Environment or a designate determines if your property is important to the preservation of Canada’s environmental heritage. Examples of ecologically sensitive lands include:

  • Provincially Significant Wetlands
  • Areas of Natural and Scientific Interest (ANSIs)
  • Areas identified as components of the Natural Heritage System, such as significant stream corridors and significant woodlands
  • Significant portions of the habitat of endangered, threatened or vulnerable species in Ontario
  • Areas managed for wildlife habitat conservation purposes which qualify under the Managed Forest Tax Reduction Program.

Donating Land and Taxes

Normally, giving away a property which has increased in value since acquisition incurs a capital gains calculation. Fifty per cent of that increase is included in your income. However, in the case of ecologically sensitive land, the inclusion rate is zero, which means you are not taxed on it (although this does not apply to donations to private foundations). And you can continue to live on the land even if you make a donation. You just need to ensure you have made provisions for the land to be passed to Environment Canada.

The government of Canada uses tax provisions to encourage charitable giving. If you own a piece of ecologically valuable land, giving it to future generations is well worth considering.

Have you considered donating land as a living legacy?

This article is brought to you by Cleo Hamel at H&R Block.

16 comments to Donating Land for Significant Tax Breaks

  • I’ve never donated land, but I’m a happy user of land donated by others! I think it’s a great legacy to leave, and it’s definitely something I’ll consider someday when the time comes. Land is a precious asset that is becoming more and more limited, so it’s great to see more emphasis placed on this.

  • I dont have any land right now, but Im not too sure if I would donate. I would rather put an easement on the land protecting it from development, but that would still allow me to retain ownership.

  • You know I never thought about it but I like this idea. We thought about donating a lot of our stuff to different charities eventually because we don’t have any kids and are not planning on having any. So there will be no family left by the time we will be old and ready to move on to a different place.

  • This is a great idea. Kinda cool that the government has embraced it with the added tax incentive. Something the US should adopt.

  • This seems a brilliant idea, particularly in a country as large as Canada. To those of us living on pocket handkerchiefs it may be a bit more difficult but how about persuading people to donate land they own in other countries?

    A Brazilian company or person could donate a large chunk of the Amazon rain forest and this would then be protected by Canadian laws. I know this sounds a bit fanciful (how would they enforce any laws, what’s in it for Canada, what’s in it for Brazil, who has sovereignty over the area, what about police etc) but maybe there is a germ of an idea here that could be taken through the UN.

    After the banks have been sorted out of course….:-)

  • I would love to do this but unfortunately I don’t have the land to do so. My parents however own some property that would potentially qualify. I will let them know about this. I know they were talking about starting a charity on it for cancer kids.

  • » Carnival Of Financial Camaraderie # 13 – Christmas Edition » My University Money

    […] PF presents Donating Land for Singificant Tax Breaks posted at Sustainable Personal Finance, saying, The government of Canada uses tax provisions to […]

  • Canadian Finance Carnival #68 – Canadian Finance Blog

    […] PF at Sustainable Personal Finance presents Donating Land for Significant Tax Breaks, saying “The government of Canada uses tax provisions to encourage charitable giving. If you […]

  • […] DestinationsJust in time for tax season, Sustainable Personal Finance writes a timely piece about Donating Land for Significant Tax Breaks.If you are looking for the best thrifty ideas around be sure to stop by the Cosmopolitan Blog Award […]

  • Carnival Of Financial Camaraderie # 13 – Christmas Edition - My University Money

    […] PF presents Donating Land for Singificant Tax Breaks posted at Sustainable Personal Finance, saying, The government of Canada uses tax provisions to […]

  • […] Just in time for tax season, Sustainable Personal Finance writes a timely piece about Donating Land for Significant Tax Breaks. […]

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>