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Conservation Options Monarch, John Mitchell Conservation Easements as Ecological Gifts An ecological gift of a conservation easement allows Canada, allowing corporate or bodies for conservation, individual donors to obtain maintenance, restoration or landowners to protect the ecologically sensitive an ofﬁcial donation receipt enhancement of the land or and claim an enhanced tax of the wildlife on the land, features of their property in perpetuity, retain title, beneﬁt. or for access to the land A conservation easement for these purposes. Many and be eligible for enhanced income tax beneﬁts. donated as an ecological gift refer to these agreements as must be publicly recorded, conservation easements. attached to the title of the • The Ontario Heritage Conservation easements property, and must be made Act provides for the Ontario are legally binding in perpetuity. As a result, Heritage Foundation to hold instruments whereby the all future landowners are easements and covenants landowner transfers speciﬁc bound to its terms. Current for a variety of purposes rights, such as the ability and subsequent landowners relating to Ontario’s heritage, to create building lots or are free to sell or otherwise including natural heritage. cut trees, to an easement transfer title to the land. Yet holder (usually a nature the conservation easement is conservation organization or still held by the conservation Monitoring and agency). Depending on the organization and the land Stewardship terms of the conservation continues to be subject to the easement agreement, the It is important that conditions of the conservation easement holder has the right easement. conservation easements are and responsibility to inspect For ecological gifts, the property and ensure the monitored. For example, unauthorized dispositions of terms of the conservation title by the holder (including the Ontario Region of the easement are being respected. re-assignment of easements) An easement donated Nature Conservancy of or changes in land use on a voluntary basis may may subject the holder Canada (NCC) ensures that qualify as an ecological gift to a substantial tax. Only under the Income Tax Act of its easement lands are the federal Minister of the Environment (Environment visited at least once a year. Canada) may approve such In some cases NCC actively changes or dispositions. All ecological gift works with the landholder conservation easement to manage the property, donations to date in Ontario have been written under one such as the savanna of two provincial statutes. restoration it undertook • Ontario’s Conservation Land Act provides for with the Savannah Links landowners to enter into Golf Course in Cambridge. agreements which grant easements and specify covenants with conservation Wood Ducks, Eric Dresser March 2007 Conservation Options - Conservation Easements Land Value When the uses associated with a property are restricted, its fair market value usually declines. The Important Components amount that the land’s value of a Conservation declines varies depending Easement on factors such as the development potential of The Covenants the land and the nature of The covenants address the restrictions imposed by the rights the landowner is giving conservation easement. For up. Covenants are usually example, a conservation negative – they do not allow easement that does not allow particular activities or land creation of building lots will uses that may impair natural generally have a great impact processes and attributes. on the fair market value of a Yet, covenants can also allow residentially zoned property activities such as responsible adjacent to a major urban forestry, usually according to centre. The same easement Canadian Wildlife Service a named set of practices or a may have less impact on the management plan attached to value of a rural or wilderness the easement. property that is less likely to be developed in the The Easement foreseeable future. The easement portion of the agreement grants to the holder, among other things, Lorne and Rhoda Almack access for the purpose of Just outside of Toronto Granting a conservation easement was the right decision for inspecting the property and granting conservation the right to take action to protecting the woods, meadows and streams on Lorne remedy any deﬁciencies. It easements on lands with and Rhoda’s property on the Oak Ridges Moraine. “The usually outlines terms such high development potential as giving notice of inspection easement allowed me to do what I wanted in terms of to the landowner. Under the has resulted in substantial allowed uses,” Lorne explains. “If someone else wants to provincial Acts the easement income tax beneﬁts for holder need not own adjacent buy the property, they can keep some horses and pursue land. many landowners. Donors some farming but cannot develop the land – no housing, Covenants are not who restrict or eliminate standardized under the golf course or severances.” Conservation Land Act. development through The intent is that they easements have in many The Almack’s easement is typical – other covenants should conserve the natural attributes of the cases received donation commonly used in easement agreements include no property. With that in receipts ranging from drainage of wetlands, no cutting of trees or no aggregate mind, the landowner and potential easement holder 30 to 80 percent of the extraction. The Almacks also received an income tax can negotiate a variety of unencumbered value of beneﬁt – ecological gift donations made on or after May 2, covenants. However, it is advisable to their property. 2006 will no longer be subject to tax on any capital gains include only covenants that accruing in respect of the property. address major threats to the natural integrity of the land and which, realistically, can be enforced and monitored. as Ecological Gifts Red-shouldered Hawk, John Mitchell Generally, the difference in value of the property before and after a conservation easement is the value of the donation receipt to which the landowner Brian and Jane Buckles is entitled. In some cases, the decline in value of the In 2001 the Buckles donated a conservation easement land can result in a lowered on their 40 hectare property to the Toronto and Region municipal property tax assessment; but this is a Conservation Authority (TRCA). At the Buckles’ request, the matter the donor must pursue covenants within the agreement severely restrict the Buckles, with property tax ofﬁcials on an individual basis. and subsequent owners of the land, from activities that include creating building lots, constructing new buildings, A Great Opportunity, Ecological Gifts A Great Responsibility and water taking; while allowing uses such as selective tree Program Conservation easements allow cutting and maple sap collection. The easement allows TRCA landowners to continue to Donors of land, or an use their land and retain to inspect the lands to ensure compliance and outlines how interest in land (such as some control over it. instances of non-compliance are to be handled. Conservation easements allow conservation easements) conservation organizations that are certiﬁed as to secure land that they Brian and Jane can continue to live on their land and are may not be able to purchase free to sell it, illustrating the advantage of conservation ecological gifts can receive or lands with multiple uses substantial income tax that would not be suitable to easements, which allow landowners to enter into an own and manage. However, arrangement to ensure their land’s natural features are beneﬁts. To certify a registering a conservation donation as an ecogift the easement is only a beginning. conserved without relinquishing full title to their property. The landowner must ecological sensitivity of the Courtesy of Brian and Jane Buckles abide by the terms of the land and the fair market conservation easement and the holder must demonstrate value of the donation must annually their interest in be certiﬁed by the Minister the land, monitor the land to ensure the landowner of the Environment is complying with the (Environment Canada). covenants, communicate with subsequent landowners, and In the case of charities, must be prepared to take Environment Canada must action in the event of non- compliance. A well-written also qualify them to receive conservation easement ecogifts. agreement should describe the steps to be taken to The Program works – the remedy problems and deﬁne the roles of the easement majority of conservation holder and landowner in easements in Ontario mediation. Occasionally arbitration or legal action have been given as may be required as a ecological gifts. resolution when other means have failed. Canadian Wildlife Service NOTE: ‘Gifts’ do not include conservation easements Not all easements and granted in order to obtain common law covenants an approval, such as qualify as ecological gifts. For a donation of a conservation granting an easement as easement, common-law a requirement of a plan of covenant or full title to be an ecogift Environment Canada subdivision. Donors and must certify that the land recipients should consult is ecologically sensitive and certify the fair market value their legal advisors or the of the donation. Canada Revenue Agency for If the donation is made to a charity, it must be eligible the deﬁnition of a gift for to accept ecological gifts income tax purposes. – not all bodies that can hold conservation easements under the Conservation Land Act are eligible ecological For more information on gift recipients. Ecological gift conservation easements, recipients may include the ecological gifts or federal or provincial crown, environmentally sensitive land municipalities and eligible donation in general contact: charities. See the Ecological Gifts Program Website for Ecological Gifts Program a list of charities that are Canadian Wildlife Service – Ontario already qualiﬁed. Environment Canada Donors are strongly 4905 Dufferin St. encouraged to obtain Toronto, ON professional, independent M3H 5T4 legal and tax advice regarding all aspects of Tel: (416) 739-4286 their donation. Fax: (416) 739-5845 Email: Ecogifts.Ontario@ec.gc.ca Website: www.on.ec.gc.ca/ecogifts Fowler’s Toad, John Mitchell Other References: Canada Revenue Agency. To order call To view amendments to Gifts and Income Tax. 1-800-959-2221 or visit the the Province of Ontario, (Canada Revenue Agency, CRA Website: Conservation Land Act, visit Publication 113, 23 pp.) www.cra-arc.gc.ca/ www.e-laws.gov.on.ca
"Conservation Easements as Ecological Gifts "