Canada Business Journal article May 2012

03-Whats New_NATIONAL 12-04-21 4:59 AM Page 29
To conserve and protect
New tax rules take the financial sting out of land trust donations
and add a new twist to real estate work.
What’s New In...
Real Estate
By Vicki Schmolka
ROBERT JOHANNSEN
W
endy Cooper got her “most
exciting phone call ever” in
September 2011. After six years
of work, Cooper, then executive
director of the Georgian Bay
Land Trust, received word that a land acquisition involving two American sisters had finally
come together. The women, who lived in
Boston, Mass., were donating a large portion of
their beloved 20-hectare (50-acre) Ingersoll
Island to the Sandy Island nature reserve, near
Parry Sound, Ont. And thanks to rule changes
and the newly formed American Friends of
Canada Land Trusts, they would enjoy the same
tax benefits as Canadian landowners who
donate property.
New Canadian tax regulations meant to
encourage cross-border conservation allowed
the sisters to fulfill their desire to protect their
part of the ecologically significant Georgian
Bay archipelago. The American donors will not
have to report any capital gains to the
Canadian government and will receive charitable receipts to apply against their U.S. income.
American Friends is a U.S.-based 501(c)(3) charity created by conservationists on both sides of
the border. It solves a problem that had prevented
Americans who own land in Canada from being able to
donate the land or a conservation easement on it to a
land trust without suffering significant financial hardship. It also has created an interesting twist on traditional real estate work for lawyers.
The sisters’ Ingersoll Island gift, the first land donation completed by the American Friends group, is likely
to be followed by many others. Cooper says the new
rules are a “game changer” and she expects “quite a bit
of activity” over the next five to ten years. Americans
own about 40 per cent of the land in some parts of the
Georgian Bay Land Trust area. “They care about the
area as much as Canadians do,” she notes, adding that
some land owners have been waiting patiently for the
complex U.S. and Canadian tax issues to get sorted out.
The land trust already has two more projects under way
with U.S. landowners.
Capital gains tax on the generational transfer of a
vacation property can be prohibitive for owners who
Avril · Mai 2012
have seen their
Peterson has witnessed what
small investment in
a lakefront properhe describes as “extraordinary
ty skyrocket in
changes” in the legal framevalue over the
work to support land conservayears, leaving them
land rich and cash
tion work.
poor. Donating a
conservation easement or a part of a property to a land trust provides a
charitable receipt for the appraised value of the donation
and, when the donation qualifies as an EcoGift, eliminates capital gains, possibly enabling heirs to keep a treasured retreat property in the family for the enjoyment of
future generations.
But land donors are not motivated chiefly by tax
advantages, says Paul Peterson, a lawyer who works out
of the Midland and Orillia, Ont., offices of Hacker,
Gignac, Rice LLP. Peterson has dedicated part of his
practice to land conservation work for more than two
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Quoi de neuf en...
03-Whats New_NATIONAL 12-04-21 5:04 AM Page 30
en droit immobilier
Conserver et protéger
Des nouvelles règles fiscales atténuent les contrecoups financiers des cessions de propriétés aux
fins de conservation et pourraient ajouter du piquant dans la pratique de certains juristes.
W
endy Cooper a reçu « l’appel
le plus excitant de sa vie » en
septembre 2011. Après six ans
de travail, l’ancienne directrice exécutive du Georgian Bay Land Trust (Fiducie
foncière de la baie Georgienne) a appris
que l’achat de terrain impliquant deux
sœurs américaines était finalement
ficelé. Ces deux femmes, résidentes de
Boston, donnaient une grande portion
de leur propriété de 20 hectares sur l’île
Ingersoll à la réserve naturelle de Sandy
Island, près de Parry Sound, en Ontario.
Et grâce à des changements de règles et
au groupe nouvellement formé de la
fiducie foncière American Friends of
Canada Land Trust, elles pourraient
bénéficier des mêmes avantages fiscaux
qu’un Canadien faisant un tel don.
En vertu de ces nouvelles règles, les
donateurs américains n’auront pas à
déclarer de gain en capital au gouvernement canadien, mais recevront un
reçu d’impôt qu’ils pourront remettre
au gouvernement américain. La fiducie
American Friends est une œuvre de
charité basée aux États-Unis, crée par
des gens soucieux de la conservation des
deux côtés de la frontière.
Wendy Cooper croit que les nouvelles
règles changeront la donne et s’attend à
ce qu’elles provoquent un certain mouvement dans les cinq à 10 prochaines
années. Environ 40 % de l’aire de la
Fiducie foncière de la baie Georgienne
est détenue par des Américains. Certains
d’entre eux, dit-elle, attendaient que les
questions fiscales soient réglées avant
de suivre la marche.
L’impôt sur le gain en capital provenant d’un transfert intergénérationnel d’une propriété de villégiature
peut s’avérer très élevé pour des propriétaires qui ont vu leur petit investissement sur le bord d’un lac exploser au cours des années. Ainsi, de
céder une portion de cette propriété à
une fiducie foncière permet d’obtenir
un reçu de charité pour la valeur du
don telle qu’évaluée. De plus, lorsqu’il
se qualifie pour le programme fédéral
de don écologique, les gains en capitaux peuvent être éliminés, permettant
aux héritiers de conserver une propriété dans la famille pour les générations futures.
Les donateurs fonciers ne sont pas
principalement motivés par des avantages fiscaux, précise Paul Peterson, un
avocat de Midland et Orilla qui a consacré une partie de sa pratique au cours
des deux dernières décennies à la conservation. Selon son expérience, ils sont
surtout « motivés par le désir de voir
une portion de terre protégée de
manière permanente ».
L’avocat de la firme Hacker, Gignac,
Rice a été témoin de ce qu’il décrit
comme des changements extraordinaires dans ce domaine de droit au
decades, beginning with Bruce Trail acquisitions in the 1990s.
In his experience, donors are “motivated by the desire to see
that piece of land permanently protected.”
Peterson has witnessed what he describes as “extraordinary
changes” in the legal framework to support land conservation
work. Today, clients who want the land they love to remain in
its natural state can consider the Environment Canada’s
EcoGift program, the option to donate or sell a conservation
easement, and the possibility of a split receipt for a part sale/
part donation transaction with a land trust (see sidebar).
Peterson advises lawyers to “think creatively to help clients
reach their objectives” and admits that he relishes being on the
leading edge of a practice area where he is always doing things
for the first time.
Land trust work is the spice in the practice of Halifax
lawyer Allen Campbell of the firm Boyne Clarke. His daily
fare is the “fairly routine” world of residential real estate and
30
cours des dernières années. À ses confrères qui pratiquent aussi dans ce
secteur, il recommande de « penser de
manière créative pour aider les clients à
atteindre leur objectif ». Pour sa part, il
admet volontiers qu’il adore être à l’avant-garde d’un domaine où il fait toujours des choses pour la première fois.
Les mandats de fiducie foncière sont
l’« épice » de la pratique d’Allen
Campbell, de la firme Boyne Clarke
d’Halifax. Son travail quotidien est axé
sur des transactions résidentielles et des
hypothèques. Donc il accueille l’occasion
de développer une relation différente
avec ses clients et trouver des solutions
créatives pour des problèmes complexes.
Karin Grubb, avocate aux bureaux de
Vancouver de Borden Ladner Gervais,
abonde dans le même sens.
Les nouveaux venus dans le domaine
devraient se préparer à de longues clôtures de transaction, note Howard
Hamilton, avocat-conseil de la plus
grande fiducie foncière du Canada,
Conservation de la nature Canada. L’un
de ses dossiers, dit-il, vient à peine de se
terminer… après 10 ans. Mais la satisfaction que l’on retire quand tout est
réglé est profonde. Rien ne dépasse la
sensation de savoir qu’une propriété sur
laquelle on a travaillé sera protégée
pour toujours, insiste Me Hamilton. « On
se sent comme après avoir marqué un
but en prolongation. » N
mortgages so he welcomes the opportunity to develop a different kind of relationship with the parties and come up with
creative solutions in a complex field. For example, in contrast to the more compartmentalized roles played by the parties in conventional real estate transactions, land trust work
gets several stakeholders involved, for example, in dynamic
brainstorming meetings to work out the terms of a conservation easement.
Karin Grubb, an associate in the Vancouver office of
Borden Ladner Gervais, agrees that her land conservation
work is the “feel good” part of her practice. Protecting habitat and natural landscapes is “the kind of work that keeps me
happy” says the young lawyer who studied environmental
biology as an undergraduate. Grubb is a member of the
Board of American Friends of Canadian Land Trusts which,
she notes, is a “working board.” She acknowledges that
some of her land conservation efforts may contribute minimal
N AT I O N A L
April · May 2012
03-Whats New_NATIONAL 12-04-21 5:02 AM Page 31
billings at this time, but says they provide many excellent networking opportunities and the opportunity to acquire valuable soft skills.
A land donation to a land conservation organization may
involve severances, surveys, appraisals, detailed reports on
the state of a property, including a species list, an EcoGift
application, and tax and liability considerations. Land trusts
must raise money to cover both the costs of an acquisition
and the continuing stewardship costs of assuming a property. Many lawyers used to donate their time to help land
trusts conserve natural areas, but as Cooper notes “the volume of activity [is getting] too challenging to be done by
volunteer lawyers.”
There are local, regional, and provincial land trusts across
Canada; the largest is the Nature Conservancy of Canada
(NCC), with its cross-Canada mandate. NCC’s budget was
almost $100-million in 2011, and it has completed almost 500
land acquisitions over the last five years. Unlike other types of
property transfers, parties involved in land conservation tend
to strategize together on how to achieve their shared objective,
points out Howard Hamilton, the NCC’s legal counsel in
Ontario. He warns newcomers to the field to be prepared for
the “long closing.” One of his files, he says, is wrapping up
after 10 years. However, the sense of satisfaction when everything is resolved, he says, is profound. Nothing beats the sense
of satisfaction of knowing that a property he has helped secure
is going to be protected forever. “It feels like scoring a goal in
sudden death overtime.” N
Vicki Schmolka is a lawyer and plain language consultant based in Kingston, Ont. She is
also the president of the Land Conservancy for Kingston, Fronteanc, Lennox and Addington.
Awards 2012
celebrating innovation in the practice of law
Tax advantages of land trusts
Conservation easement or servitude
• A landowner signs an agreement with a land trust to protect the natural values of a property. Each easement is unique. For example, an
easement agreement might restrict the subdivision of the property, its
development or commercial use, the construction of new buildings,
shoreline changes, and logging. The donor retains ownership of the
property and receives a charitable receipt for the appraised value of the
restrictions placed on it. The agreement is registered on title and is
binding on future owners.
EcoGifts
• Environment Canada’s EcoGifts program provides tax advantages to
landowners who donate ecologically sensitive land or a conservation
easement on the land to a land trust. Corporations can deduct the
value of the donation from their taxable income. Individuals will experience a zero capital gain on the disposition of the property and may
use the full value of the charitable credit in one year, or carry an unused
portion forward for up to five years.
Split receipting
• A landowner may sell a property to a land trust for part of its value
and may receive a charitable receipt from the land trust for the gift
of the remaining value. The landowner’s gift must be at least 20 per
cent of the property’s total appraised value.
CALL FOR ENTRIES
sponsored by:
Platinum Sponsors
Gold Sponsors
ABA Law Practice Management Section
Canadian Bar Association
International Legal Technology Association
Thomson Reuters
Silver Sponsors
Altman Weil, Inc.
Association of Legal Administrators
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Additional information and entry forms are available online at
www.innovactionaward.com. All entries must be received by
Friday, June 1, 2012.
Avril · Mai 2012
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