Securities gifts include stocks, bonds, bills, warrants and
futures traded on approved stock exchanges in Canada and certain
other countries. The 2006 Canadian federal budget introduced a
special tax incentive on gifts of publicly traded securities and
mutual funds - gifts of securities to a charity eliminate the
capital gains tax. Donating securities directly, as opposed to
selling the securities first and then donating the cash received,
is more lucrative for both the donor and the charity. For
example:
A donor has shares bought for $400, which are now worth $1,000.
If the shares are sold and the cash donated, the
individual will have a capital gain of $600, taxed as though 50 per
cent were income.
At an Ontario marginal tax rate of 46.41 per cent, the capital
gains tax would be $139.23, leaving a donation of $860.77, which
would garner a tax receipt of $399.48.
:::
Direct donations are worth more - If the $1,000
worth of shares is donated directly, the tax credit is $464.10 and
the $139.23 of capital gains tax is avoided. So the charity
benefits by receiving the full $1,000 and the investor benefits by
more than $600. In fact, granted the tax credit was more than the
original price, the investor has actually made a profit on the
shares.
For more information, please contact
Laurie Priestman
or
Kelly Manoukas
at the Lifesaving Society by phone 416-490-8844 or fax
416-490-8766.
Our mailing address is:
Lifesaving Society
400 Consumers Road
Toronto, Ontario M2J 1P8