Tax receipts are a common form of compensation for the grant of a conservation easement, but are only applicable to easements granted in perpetuity. Both land trusts and government agencies can issue tax receipts. Donations of conservation easements are eligible for favourable income-tax treatment for the donor federally and provincially. For the most part, the tax implications are the same as for any other type of charitable donation, though certification under the federal Ecological Gifts Program greatly augments these benefits.
For a corporation, taxable income is reduced by an amount equal to the value of the donation. For individuals, a non-refundable tax credit is applied to their tax payable. Normally a tax credit can be used in the year of donation or carried forward for as many as 5 years, however, this carry forward period is extended if the gift is certified under the Government of Canada Ecological Gift Program. The value of tax credits can vary with the location and circumstances of the conservation easement, and include negotiations between donors, the conservation organization and the Minister of Environment and Climate Change (ECC).
It is important to recognize that only “gifts” are eligible for a tax receipt. This means that any conservation easement that is provided in exchange for something is not considered to be a gift given “freely and without consideration.” For example, conservation easements provided to secure special development considerations from a municipality or conservation easements provided to a land trust in exchange for grazing rights on another property would not be considered “gifts” and would not be eligible for a tax receipt.
