There is a certain nobility in giving things away to friends or to good causes. Unfortunately, Canada's Income Tax Act anticipates that some people give money and valuable property just to avoid taxes. Therefore, to avoid being snared by good intentions, it's vital to make gifts in view of tax law.
From an estate planning perspective, it makes a lot of sense to give away property that would otherwise pass through probate with resulting lawyers' fees and court costs. Those expenses reduce how much one has to give.
Property of any kind that is given away is considered by tax law to have been disposed of at fair market value. If the property has appreciated in price since acquisition, the gift can subject the donor to a capital gains tax on the difference between cost and market price. There is one major exception, however, and that is gifts made to a spouse or, in the new language of the Income Tax Act and related legislation that ranges from the Agricultural Marketing Program Act to the War Veterans Allowance Act, "common law partner". The phrase includes persons of the same sex. Those gifts are deemed by law to be disposed of at their adjusted cost base, which is cost of purchase plus any improvements made in them.