Here are some of our most asked questions about gifts of stock and securities. Reach out to us if you have any questions and we will direct you to our trustworthy and knowledgeable Financial Advisor.
Benefits of making gifts of stock and securities:
- Capital gains on publicly listed stocks and securities are tax exempt on gifts.
- Your receipt will be valued on the closing price on the day when the shares are legally transferred to your account.
- Claim charitable donations up to 75% of your net income. A five-year carry forward on any unused donation amount is permitted.
What counts as publicly listed securities?
Your donation must be of securities that are traded on a public market in Canada or the United States. This includes stocks and mutual funds.
How do I actually save more and give more by donating gifts of securities?
Let’s say you purchased common shares in “X” Company for a cost of $20,000. If the current market value of the shares has increased to $100,000, you would have a capital gain of $80,000. If you sell these shares, and donate the cash, you would need to pay tax on the capital gain. Instead, by donating the shares you get a tax receipt for $100,000 and pay zero capital gains tax. As a result, you now have a tax credit of $46,000, which is $18,400 more than if you had sold the shares and donated the proceeds. Thus, this method of giving is more tax-efficient. **
|Illustration||Sell Shares & Donate Cash||Donate Shares Directly|
|(a) Fair market value of your investment today||$100,000||$100,000|
|(b) Value of your shares when you purchased them||$ 20,000||$ 20,000|
|(c) Capital gain at time of sales||$ 80,000||$ 80,000|
|(d) Taxable capital gain (50%)||$ 40,000||$ 0|
|(e) Tax credit on donation (at 46%)||$ 46,000||$ 46,000|
|(f) Tax on capital gain (at 46%)||$ 18,400||$ 0|
|(e) – (f) Net tax savings||$ 27,600||$ 46,000|
** The illustration provided above is general in nature and does not constitute legal or financial advice and should not be relied upon as a substitute for professional advice. We strongly encourage you to seek professional legal and financial advice before deciding upon your donations to Aylmer Area Community Foundation.
How long does it take for my donation to reach Aylmer Area Community Foundation?
Generally, most securities take a few days once the Letter of Authorization has been submitted to the Financial Advisor. Some securities, however, can take a few weeks (e.g. Mutual Funds).