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Many Tides Canada donors are taking advantage of the tax incentives announced May 2006 on donating publicly traded securities to registered charities or foundations.
If you have publicly traded shares in your portfolio that would generate a substantial taxable gain if you sold, you can consider donating some of those shares to make your next donations. You will get a tax receipt for the full market value of the shares and there will be no tax to pay on the disposition of the shares.
The key to executing this tax strategy successfully is to make sure you gift the securities to a charity or foundation, don’t sell them and donate the cash.
Here’s how it works:
BEFORE the May 2006 tax incentives:
Sell public securities worth $10,000 with a cost base of $4,000 and donate the proceeds to a charity or foundation.
|
| Capital gain ($10,000 - $4,000) |
$6,000 |
| Taxable gain (50% inclusion rate) |
$3,000 |
| Tax on gain (@ 45%) |
$1,350 |
| Tax credit on gift (@ 45%) |
$4,500 |
| Net cost to the taxpayer |
$6,850 |
AFTER the May 2006 tax incentives:
Donate securities worth $10,000 with a cost base of $4,000 to a a charity or foundation..
|
| Capital gain ($10,000 - $4,000) |
$6,000 |
| Taxable gain (0% inclusion rate) |
NIL |
| Tax on gain (@ 45%) |
NIL |
| Tax credit on gift (@ 45%) |
$4,500 |
| Net cost to the taxpayer |
$5,500 |
We accept donations of publicly traded securities to any of the funds held at Tides Canada Foundation. To receive further information on donating securities please contact Tricia Cummings at tricia@tidescanada.org at 604.647.6611 ext. 243. |
