APPRECIATED SECURITIES

Gifting stock or securities through Saskatoon Community Foundation allows the donor to receive a tax receipt for the full amount, essentially eliminating the capital gains taxes associated with the stock. Donors can benefit from this added incentive to reduce the real cost of their charitable giving or increase the amount of their gifts without increasing the cost.

Note to reader: The purpose of this publication is to provide general information, not to render legal advice. In addition any changes in the tax structure may affect the examples listed in this information. Your client should consult their own lawyer or other professional advisor about the applicability of this information to their situation.

GIFT EXAMPLES

  • Publicly listed shares, rights and debt obligations
  • Shares of a Canadian public mutual fund corporation
  • Units of widely held Canadian mutual fund trusts
    Note 1: Securities that are listed on Toronto, Montreal and tiers 1 and 2 (but not 3) of the TSX Venture Exchange qualify for this incentive, as do those that are listed on the NYSE, Nasdaq (excluding the Over-the-Counter Bulletin Board) and most other major foreign exchanges

BENEFITS TO THE DONOR

Immediate donation receipt for fair market value of security, generally determined as the closing price on the day the gift is received by the charity
Favourable reductions in capital gains taxation
Gifts can be given during donor’s lifetime or after, through their estate.
MOST APPROPRIATE FOR
Donors with investment portfolios that include significantly appreciated securities.
EXAMPLE
Donor wishes to make a gift of $10,000

Fair market value of stock $ 10,000
Cost base of stock 2,000

Option 1 – Sell stock and make $10,000 gift from cash proceeds
Option 2 – Gift stock to charity

Option 1 Option 2
Sale/Gift of Stock $ 10,000 $ 10,000
Capital gain 8,000 8,000
Taxable gain (50% x $8,000) 4,000 0

Gift tax credit (45% * 10,000) 4,500 4,500
Tax on gain (45% * 4,000) (1,800)

Cost of gift 7,300 5,500

For illustration purposes a combined tax rate of 45% was used. Please note that combined tax rates vary across the provinces. 2015 tax table.

Note to reader: The purpose of this publication is to provide general information, not to render legal advice. In addition any changes in the tax structure may affect the examples listed in this information. Your client should consult their own lawyer or other professional advisor about the applicability of this information to their situation.