Gifts of Securities
You can make a difference by donating publicly listed shares, regardless of whether they have increased or decreased in value. Thanks to Canada Revenue Agency tax law changes in 2006, Canadians who donate appreciated securities (including stocks, bonds and mutual funds) directly to a registered charity eliminate capital gains tax on the investment.
Benefits to this way of donation include:
- a tax receipt for the fair market value of the security gift
- exempt from the capital gains tax that normally applies to the sale of a security
Donor wishes to make a gift of $10,000
Fair market value of stock $ 10,000 Cost base of stock 2,000 Option 1 - Sell stock and make $10,000 gift from cash proceeds
Option 2 - Gift stock to charity
(Source: http://www.cfc-fcc.ca/pa-eresource/6-gift-options/appreciated-securities.cfm)Option 1 Option 2 Sale/Gift of Stock $ 10,000 $ 10,000 Capital gain 8,000 8,000 Taxable gain (50% x $8,000) 4,000 0 - Gift tax credit (45% * 10,000) 4,500 4,500 Tax on gain (45% * 4,000) (1,800) - Cost of gift 7,300 5,500
Note: Example provided is for general information purposes only, please contact your lawyer or securities representative for further details pertaining to the benefits of donating securities.