Discover the Tremendous Benefit of Donating Publicly Traded Securities to Charity
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%.
Instead of selling the securities, your client transfers them to Abundance Canada as a gift in-kind.
Abundance Canada will send your client a donation receipt for the fair market value of the securities on the day they initiated the gift-in-kind transfer.
Example of the Tax Advantage for a Donation of Securities to Charity
|Sell securities and donate cash||Donate securities as gift in-kind|
|Donation to charity||$50,000||$50,000|
|Adjusted Cost Base||($10,000)||($10,000)|
|Capital Gain||$20,000 (50%)||$40,000|
|Taxable Capital Gain||$20,000 (50%)||$0 (0%)|
|Marginal Tax Rate (example)||40%||40%|
In this example, when the securities are donated directly to the charity as a gift in-kind, your client does not realize a taxable capital gain, saving them $8,000 in tax payable. The $50,000 donation receipt can then be used to off-set other income tax payable.
Tax Planning Tips:
- Eliminate the taxable capital gain on the donated securities
- Client receives a donation receipt based on the fair market value of the securities on the date they initiated the transfer to Abundance Canada
- Client uses donation receipt to off-set other income tax payable
Download a copy of our Technical Information Sheet on Publicly Traded Securities here.
Contact Abundance Canada if you have clients who might benefit from donations of publicly traded securities.