The Conservative government will announce tax changes Friday that encourage the protection of key pieces of land across southern Canada.
From the coastal shores of Vancouver Island to Ontario lakefront properties, some of Canada’s most environmentally sensitive lands are owned as recreational properties by Americans.
Canadians who donate real estate to land trusts don’t have to pay capital gains taxes and can claim the gift as a charitable donation on their income taxes, but Americans who own land in Canada cannot. Given the value of some of the sites, the tax implications are significant enough to prevent Americans from donating them.
Now a tax change approved by cabinet will offer their donations essentially the same tax breaks as Canadians.
“It’s an enormous advancement for land conservation in Canada,” said Lisa McLaughin, a compliance manager with the Nature Conservancy of Canada.
Finance Minister Jim Flaherty is scheduled to make the announcement at Thickson’s Woods Nature Reserve near Whitby, Ont. – a popular spot for birdwatchers during the spring migration that will serve as a backdrop and an example of a land trust.
He will also be joined by a new organization called the American Friends of Canadian Land Trusts, which will launch a national campaign to encourage donations of land. The new organization says there is plenty of pent up demand from U.S. landowners.
“I think there will be quite an influx,” said Bonnie Sutherland, the founding board member of the organization.
Because the land trust group is based in the United States, U.S. donors would not only be able to avoid the Canadian capital gains tax, they would also be able to claim the gift as a charitable donation on their U.S. tax returns.
Land trusts are non-profit organizations, often run by volunteers, that target key lands for conservation. They usually raise revenue from charitable donations, and use the funds to buy land.
Protected lands can then be subject to varying rules. Some trusts may allow an existing cottage to continue, others may allow nature trails, and others, covering particularly sensitive lands, will keep the area in a completely wild state.
Under the new rules, donated land could also be used as a source of revenue for land trusts so that they can go after properties that are more desirable from an environmental perspective.
A government official confirmed the announcement and said the tax change is not expected to have any implication in terms of federal revenue.
The lands owned by Americans tend to be near the border and include many key properties in Atlantic Canada and on the Pacific coast.
Ms. Sutherland said five donors already want to use the new tax break even before it has been announced.
One has an island in Ontario’s Georgian Bay, and the four others have land in Nova Scotia, including 200 acres on St. Mary’s River Acadian flood plain forest that is home to the endangered wood turtle and is an important habitat for Atlantic salmon.
