Give a gift of securities and benefit come tax time
The year end and holiday season is a time for giving, but when you give you can also receive…
Remember that in addition to the tax credit, NO tax on any capital gain applies to gifts of publicly-traded securities given to charities.
- To qualify, the securities must be listed on a prescribed public exchange. Bonds and mutual fund units are also accepted.
- The tax credit is based on fair market value on the day ownership is transferred (typically closing price).
- NONE of the capital gain is taxable.
- Annual donation limits are 75% of net income in a given year.
- There is a carry-forward period of 5 years for excess contributions.
Benefaction can help. We’ll issue you just one tax receipt and you can provide us with a list of charities to receive your gifts. Just fill out our Gift Form and send it in before December 31st. Remember to instruct your broker to transfer the securities too.
It is important to note one recent exception to the no tax on capital gain rules. The Federal Budget of 2011 eliminated part of the tax benefit that existed where a Canadian taxpayer buys a flow through share and then donates it to charity. The taxpayer continues to benefit from the allocated FT resource deduction and the charitable donation tax credit, but is now going to be taxed on the capital gain equal to the lesser of the FMV and the original cost of the shares.
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