Appendix 1

The following definitions are not exhaustive, and are to be used for the purposes of this handbook only. Specific questions should be referred to independent legal and tax advisors.

Capital gain: The amount by which a capital asset, such as land, appreciates in value while it is in the owner’s hands.

Covenant: An agreement between parties whereby one party has rights to the land of the other. For the purposes of the Ecological Gifts Program, covenants function to protect and conserve natural features, wildlife habitats or other heritage values. In addition to restrictions on land use, covenants are usually accompanied by a right of access for monitoring and enforcing compliance. All covenants donated through the Ecological Gifts Program must be registered on the title to the land, and bind future owners to the terms of agreement.

Covenants, easements and servitudes are similar in nature. Definitions under provincial and territorial legislation may vary, so always consult the appropriate legislation for exact information.

Designated certification authority: The authority—a federal, provincial, territorial, or non-government official—designated by the federal Minister of the Environment to certify land as ecologically sensitive for the purposes of the Ecological Gifts Program.

Easement: A right of use over the land of another. For the purposes of the Ecological Gifts Program, easements function to protect and conserve natural features, wildlife habitats or other heritage values. All easements donated through the Ecological Gifts Program must be registered on the title to the land, and bind future owners to the terms of agreement.

Covenants, easements and servitudes are similar in nature. Definitions within provincial and territorial legislation may vary, so always consult the appropriate legislation for exact information.

Ecological gift or ecogift: A gift of land or a conservation easement, covenant, or servitude on land that is certified as ecologically sensitive by the federal Minister of the Environment or the Minister’s designate in accordance with the provisions of the federal Income Tax Act, and that otherwise meets the requirements of the Act that give rise to special tax benefits.

Fair market value: The most probable price that a property should bring in a competitive and open market as of the specified date under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of the specified date and the passing of title from seller to buyer under conditions whereby:

• both buyer and seller are typically motivated;
• both parties are well informed or well advised, and acting in what they consider to be their best interests;
• a reasonable time is allowed for exposure in the open market;
• payment is made in terms of cash in Canadian dollars or in terms of financial arrangements comparable thereto; and
• the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

Fee-simple estate (or interest): Absolute ownership, unencumbered by any other interests or estate, subject only to the limitations imposed by the governmental powers of taxation, expropriation, police power, and escheat.

Official donation receipt: The receipt issued to a donor by a recipient as proof of the donor’s gift for certain purposes of the Income Tax Act and containing the information required by Part XXXV of the Income Tax Regulations, Receipts for Donations and Gifts.

Recipient: An organization that may receive ecological gifts, including eligible environmental charities, federal, provincial, and territorial governments, municipalities, and municipal or public bodies that perform a function of government.

Servitude: In conservation terms, a legally binding agreement made between a landowner and a conservation organization or government agency for the purposes of protecting and conserving natural features, wildlife habitats, or other heritage values. The definition of total ecological gifts in Canada’s Income Tax Act includes servitudes “for the use and benefit of dominant land”. Consequently, the recipient of the donated servitude must own land that borders on the land to which the donated servitude applies in order for the servitude to qualify as an ecological gift under the Act. Only a real servitude can qualify as ecogift.

All servitudes donated through the Ecological Gifts Program must be registered on the title to the land, and bind future owners to the terms of agreement.

Covenants, easements and servitudes are similar in nature. Definitions within provincial and territorial legislation may vary, so always consult the appropriate legislation for exact information.