In my last post on ecological gifts in Canada, I described how you can donate ecologically sensitive land to a qualifying organization, receive some Canadian income tax benefits now, while continuing to use and enjoy the land during your lifetime.
If you do this, you will not be able to leave the land in your will to your heirs, nor will you be able to sell the land (except for your limited interest which may not be marketable).
An alternative way of preserving the natural features of your ecologically sensitive land for the future, while enjoying some tax benefits now, is to register a conservation covenant.
A conservation covenant is an agreement registered against your land that affects what you and future owners may do with your land. The purpose of a conservation covenant is to preserve natural features of the land including wildlife.
Because a conservation covenant will restrict or prevent future development of your land, it will reduce the value of your land. The reduction may be small in some areas, but substantial in others, such as land that could otherwise be developed in Vancouver, or another large city.
The conservation covenant is held by a government or private organization, which may enforce the covenant, if you or a future owner fails to comply with the terms of the covenant.
If you grant a covenant on ecologically sensitive land to a qualifying organization, then you will receive a tax receipt for the value of the covenant. The amount of the receipt will be significantly lower than the amount you would receive if you donated the land, or even donated the land subject to a life interest.
Each province has its own legislation concerning conservation covenants.
In British Columbia, section 219 of the Land Title Act governs conservation covenants. A covenant may include provisions “that land or a specified amenity in relation to it be protected, preserved, conserved, maintained, enhanced, restored or kept in its natural or existing state in accordance with the covenant and to the extent provided in the covenant.” The covenant must be in favour of the provincial government, a municipality or regional district, or certain organizations (usually land trusts) approved by the provincial government.
For more information you may wish to read a short article by the Land Trust Alliance of British Columbia here.