Securities as a Charitable Gift Option

Gift Examples

• Shares listed on a designated stock exchange*
• Shares of a mutual fund corporation
• Units of a mutual fund trust
• Prescribed debt obligations such as government savings bonds

*Toronto Stock Exchange, Montreal Stock Exchange, Tiers 1 and 2 of the TSX Venture Exchange, NYSE, NASDAQ and most major foreign exchanges

Donor Benefits

There are several key benefits to making a gift with securities. Donors receive an immediate donation receipt for the fair market value of the security, generally determined as the last quoted trading price on the day the gift is received by the charity. In addition, donors receive favourable reductions in capital gains taxation. As well, gifts can be given during a donor’s lifetime or after, through their estate.

Here’s an example of how it works:
Let’s say you purchased common shares in ABC Company for a cost of $1,000. If the current market value of those shares has increased to $10,000, you would have a capital gain of $9,000.

If you sell those appreciated shares and donate the cash proceeds to the Community Foundation, you’ll owe tax on 50% of the capital gain.

But when you donate and transfer the shares directly to the Foundation, you owe no capital gains tax and you’re able to receive a charitable tax receipt for the full value.

Here are some approximate figures to illustrate the point

1* This assumes a 44% marginal tax rate.  For calculating capital gain tax, this rate is applied to 50% of the capital gain.

2* $8,020 represents the full value of $10,000 donation minus estimated capital gain of $1,980.

3* Charitable donation tax credits in Ontario for 2016 on donation amount after tax.

Note: These are general figures for the purpose of illustration and do not constitute legal or financial advice.  We encourage you to seek professional legal and/or financial advice before deciding on your donation to charity.

By donating shares directly instead of selling and donating the cash proceeds, you can save on taxes overall while donating the same value amount to charity.

For further information, contact us at 613.546.9696.  We’re here to help you build a legacy that will create positive and lasting impacts in our communities.