Gift of Securities by an Individual

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 cashDonate 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%
Tax Payable$8,000$0

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.

Next Steps

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

Forms

Gift in Kind Form – Mutual Funds

Gift in Kind Form – Stocks & Bonds