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Donating Publicly Listed Securities The outright sale of stocks, almost always, trigger capital gains tax because of the growth you have realized. However, if the stocks are transferred directly to the EFC’s brokerage account all capital gains taxes will be eliminated. This is true even when a gift of stocks is directed in the will. This is one of the most tax-advantaged ways of making a charitable gift. You can obtain the form authorizing the transfer of shares in the right hand bar under Donating Publicly Listed Securities. Capital gains tax on securities
The tables below illustrate the difference between donating the cash proceeds from the sale of publicly listed securities and transferring them to the EFC brokerage account. Donating cash proceeds from sale
of Publicly Listed Securities | Fair Market Value | 5,000 | Adjusted cost base | 2,000 | Capital gain | 3,000 | Taxable capital gain (50%) | 1,500 | Tax on capital gain (46.2%) | 693 | Cash available for donations
($5,000 minus $693 tax) | 4,307 | Tax credit on gift
($4,307 x 46.2%) | 1,990 | Total tax assistance
($1,990 minus $693 tax payable) | $1,297 |
Transferring Publicly Listed Securities
directly to the EFC brokerage account | Fair Market Value | 5,000 | Adjusted cost base | 2,000 | Capital gain | 3,000 | Taxable capital gain (50$) | 1,500 | Tax on capital gain | 0 | Amount of donation
($693 more than donating cash) | 5,000 | Tax credit on gift
($5,000 x 46.2%) | 2,310 | Total tax assistance
($2,310 credit plus $693 saving) | $3,003 |
Donating the cash proceeds from the sale of publicly listed securities to the EFC results in a lower tax savings of $1,297 compared to $3,003 when stocks are transferred directly to the EFC brokerage account.Donating the cash proceeds from the sale of publicly listed securities to the EFC results in a smaller gift to the EFC of $4,307 compared to $5,000 when stocks are transferred directly to the EFC brokerage account.Stock Options
http://www.cra-arc.gc.ca/
Gifts of securities acquired under a security option plan - you can claim an additional deduction on line 249 of your return for donating publicly-listed shares of corporations or mutual fund units you acquired through your employer’s security option plan. However, you must meet all of the following conditions: You acquired a security or a mutual fund trust under an option that was granted to you as an employee of a corporation. You disposed of the security in the year it was acquired, and not more
than 30 days after its acquisition, by donating it to a qualified donee that is
not a private foundation.
Claim 25% of the amount that would be the employment benefit for donations made before May 2, 2006. For donations made after May 1, 2006, the additional deduction is 50% of the taxable benefit. When calculating the employment benefit, the fair market value (FMV) of the security when the option was exercised is considered to be the lesser of: - the FMV of the security at the time of acquisition; or
- the FMV of the security at the time of disposition.
You may have a capital gain on the disposition of the security. For more information, see “Capital gains and losses” on page 17.
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Legacy Giving Links:
Form to obtain Gift Annuity quote
Form for Donation of Securities
LG Contact information:
To know more about legacy giving, please contact Bill Winger, Vice President, Operations at legacygiving@theEFC.ca or (905) 479-5885 x 231 or toll free at 1-866-302-3362 x 231
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