Summary Policy

Date
September 3, 2003 (Revised November 23, 2005)

Reference Number
CSP - G04

Key Words
Gift (conditional)

Policy Statement

There are two types of conditions that can be attached to a gift: a condition precedent, and a condition subsequent.

A condition precedent is one that must be met before the gift takes effect (e.g., a gift of $100,000 provided that the registered charity is able to raise an equal amount of money within a stated period of time). Since a condition precedent is not a gift at law until after the condition is fulfilled, a charity should only issue an official donation receipt after the condition has been met.

A condition subsequent is one that operates to defeat a gift that has already been made (e.g., a gift made to a registered charity on the condition that the funds be used to operate a particular shelter for the homeless). If a condition subsequent fails and the gift reverts back to the donor, the charity should advise the Canada Revenue Agency that the original gift is being returned to the donor. A condition subsequent may result in a subsequent tax liability.

References

• Gift (donation), CSP-G01.
• Receipt, CSP-R02.
• Gift (conditional), CIL-1998-031.
• CCRA Update, CES-011, CES-012.