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.
Example:
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 |
| Capital gain | $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 |
