Gifts of Publicly Traded Securities
Donating publicly traded securities (stocks, bonds and mutual funds) is the most taxefficient 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, you transfer them to Abundance Canada as a gift in-kind.
Abundance Canada will send you a donation receipt for the fair market value of the securities on the day you initiated the gift-in-kind transfer.
Example of the Tax Advantage for a Donation of Securities to Charity
| Action | 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 | $40,000 | $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, you do not realize a taxable capital gain, saving you $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.
- Receive a donation receipt based on the fair market value of the securities on the day you initiate the transfer to Abundance Canada.
- Use donation receipt to off-set other income tax payable.
Next Steps
Established in 1974, Abundance Canada envisions a world where everyone lives generously, because we believe generosity changes everything™. To learn more about creating your Generosity Plan, contact Abundance Canada at 1.800.772.3257 to speak with a gift planning consultant. All consultations are confidential, with no obligations.