UBC donor’s gift agreement raises thorny tax questions
On January 22, 2015, a UBC lawschool alumnus, Peter A. Allard, Q.C., made a whopping $30-million donation to the faculty. In a ceremony that day, the university announced that the law school was being renamed the Peter A. Allard School of Law.
“My gift supports pillars of excellence in human rights, and international integrity and ethics, and my hope is that the law school will become a beacon for justice, and the promotion of human rights and the rule of law around the world,” Allard said in a statement on the UBC website.
With his gift, Allard, a nonpractising lawyer and son of Canadian broadcasting tycoon Charles Allard, became the largest donor to any law school in Canada.
Under the law, a person can only receive a charitable-donation receipt if they voluntarily transfer a “gift” for no consideration.
In 2016, the Income Tax Act offered a tax-credit rate of 33 percent to donations above the first $200 when a person’s taxable income exceeded $200,000.
“A gift must be given freely. If a gift is made as a result of a contractual or other obligation (for example, a court order) a receipt cannot be issued,” the Canada Revenue Agency states on its website.
In recent years, these charitable tax receipts have been issued in connection with naming rights for buildings. There are several of them at UBC.
But Allard wanted his gift to go further than just having his name on a building. He has maintained that his “gift agreement” with UBC also required campus officials to put his name on all degree certificates from the law school.
These included graduate degrees for students based on recommendations from the faculty of graduate and postdoctoral studies.
UBC disagreed, and it went to arbitration.
In 2019, the arbitrator ruled in UBC’s favour. Allard’s name would only appear on certificates that mentioned the “faculty of law” and would not appear on graduate degree certificates that don’t include the words “faculty of law”.
Allard and the Allard Prize Foundation then sought leave to appeal the arbitrator’s ruling in B.C. Supreme Court. Justice Karen Douglas dismissed their petition.
CANADA REVENUE AGENCY RULES
There are questions arising from the litigation with respect to Allard’s $30-million donation to UBC. Was this indeed a gift made for no consideration? Or was it part of a contractual obligation?
In other words, is the “gift agreement” a “contract”? If the Canada Revenue Agency were to conclude that Allard viewed this as a binding contract, would that have any tax implications for him personally or for the foundation that bears his name?
The Canada Revenue Agency website states that gifts provided in exchange for advertising or sponsorship generally do not qualify for charitable tax receipts. If Allard wants his name on degrees, could that be construed as advertising his good name? According to the Canada Revenue Agency, when a donor receives an “advantage” for a donation, some or all of the contribution may no longer qualify as a gift.
One thing is clear: Allard made a bargain with UBC. If UBC faculty, staff, or students—or any member of the public—are bothered by Allard’s litigation, they have an option. They could ask Canada Revenue Agency to issue a ruling on whether any money that flowed from this gift agreement met the legal test of being a “gift” under Canadian tax law.