Gift of Securities by a Corporation

Publicly Traded Securities: The Most Tax-Efficient Way to Donate

Donating publicly traded securities (stocks, bonds and mutual funds) is the most tax-efficient way to make charitable donations. When publicly traded securities are donated “in-kind” to a Canadian charity like Abundance Canada, the capital gains inclusion rate drops from 50% to 0%.

If your client donates the securities from within their corporation, they will realize an additional benefit; the tax-free portion of the capital gain is added to the corporation’s Capital Dividend Account (CDA).

When a corporation donates publicly traded securities, the entire capital gain is tax-free, so 100% of the capital gain is added to the CDA. A positive balance in the CDA can be paid out to shareholders as a tax-free dividend.

Example of the Tax Advantage for a Donation of Securities to Charity by a Corporation

Sell securities and donate cashDonate securities as gift in-kind
Donation to charity$50,000$50,000
Adjusted Cost Base($10,000)($10,000)
Capital Gain$40,000$40,000
Taxable Capital Gain$20,000 (50%)$0 (0%)
Increase in the CDA$20,000 (50%)$40,000 (100%)

Tax Planning Tips

  • Eliminate the taxable capital gain on the donated securities
  • Receive a donation receipt for the fair market value of the securities
  • 100% of the capital gain is added to the CDA

Download a copy of our Technical Information Sheet on Publicly Traded Securities here.

Next Steps

Contact Abundance Canada if you have clients who might benefit from donations of publicly traded securities.


Gift in Kind Form – Mutual Funds

Gift in Kind Form – Stocks & Bonds