Finance committee  —that person will get a donation credit based on whatever the value was of that....

Finance committee  Yes—which again is a question of fact.

Finance committee  That's right. That goes to the idea that you're supposed to get recognition for tax purposes for the amount by which you were impoverished. That is, how much did you really give up to the charity?

Finance committee  Well, if somebody else has donated the time share—

Finance committee  The new rule will override that.

Finance committee  You're saying it's the charity that's auctioning it off?

Finance committee  The person will not get a receipt for that, because they have acquired the right to use that condo. They paid $6,000 for it. The CRA would apply these rules, saying that they feel you got fair market value consideration when you auctioned that off. Now, if—

Finance committee  On any individual case it is a question of fact as to what the value of the property is. I'm not familiar with the example that you've given, and I guess I couldn't comment on it anyway, being a specific case, but in general, what I can tell you about donations of certified cultural property is that they're not covered by these rules that are in Bill C-48.

Finance committee  I'm sorry, it's just the opposite. Say you pay $150 for a round of golf and the green fee is $50, you'll get a charitable receipt for $100. Now I'm not sure that we're talking about the same thing. Yes, there are rules in there to deal with that. That is, there are rules that will allow the charity to issue a receipt for $100 in that example, but that didn't sound like the same thing that you were asking about.

Finance committee  Yes. The labour-sponsored venture capital corporation measures were asked for by people in the sector. They're there because of the withdrawal of the LSVCC credit in Ontario that caused liquidity problems. With regard to these measures, all they do is implement what was requested by people within the sector, to turn off some penalties if those corporations want to wind down, and otherwise help them deal with their liquidity issues.

Finance committee  The rules that were in Bill C-10 were rules to simplify the calculation of the film tax credit for Canadian films and they were the product of a couple of years of consultations with the film industry around 2003. The rules were announced in 2003. In Bill C-10, in the Senate, the film industry expressed concern with what's called the public policy test.

Finance committee  To put it briefly, where there's smoke, there's fire. There are factors that seem to exist, things like tax advisers who charge contingent fees. Who would do that? That is, it's contingent on the tax benefit. So that's one hallmark. Contractual protection, that is a guarantee. “Even if this transaction doesn't work, the CRA challenges it, don't worry, we will guarantee you your tax benefit, we'll pay it for you.”

Finance committee  Yes, that's right. Your description of the proposal is not exactly correct. It's about half correct. It is true that it requires the reporting of what we call an avoidance transaction. It's defined in the tax law. But it's only a reporting of that avoidance transaction if also there are two out of three hallmarks present—what we call hallmarks.

Finance committee  The first point is that the term “fair market value” is used throughout the Income Tax Act. It's a question of fact as to what the market value of something is. It's generally speaking the amount that a willing buyer and seller will negotiate in an open market. There's nothing in the Income Tax Act that defines what this is, but it's essential that we use this term in various places to try to determine a valuation where there's not an exchange of cash.