This is one of the most tax-smart ways to support TCS. A gift of publicly traded securities is exempted from capitals gains taxes and receives a tax credit.
Advantages of gifts of stocks and securities:
- Receive a charitable tax receipt for the fair market value of the donated security.
- Benefit from a capital gain inclusion rate of zero when you directly donate eligible stocks or securities.
- When your executor donates securities, not only does your estate not pay capital gains tax, but it also benefits from the full charitable tax receipt to offset any owed taxes.
- A security that has doubled in value can see a tax savings of around 60%.
How to donate:
There are two of ways to give stocks and securities:
- Bequeath shares, debt obligations or rights listed on a designated stock exchange.
- Donate a share of the capital stock of a mutual fund corporation, or a mutual fund trust unit. For more information, download Gifts of Securities Form (CA), Gifts of Securities Form (US), or call Shelley Henderson at 905-885-3217 ext. 1248 for assistance.
Peter wants to support TCS with a gift of $100,000. The following chart compares the costs & savings of donating securities directly to an offer of cash or purchasing a different security instead.
|Sell shares and donate cash to TCS||Donate shares directly to TCS||Sell shares and buy $100,000 of another security|
|Market value of security (a)||$100,000||$100,000||$100,000|
|Adjusted cost base||$50,000||$50,000||$50,000|
|Taxable capital gain||$25,000||$25,000||$25,000|
|Tax on capital gain (50%) (b)||$12,500||$0||$12,500|
|Tax savings from donation tax credit (46%) (c)||$46,000||$46,000||$0|
|Total cost of transaction (a)+(b)-(c)||$66,500||$54,000||$112,500|