Donation
Gift Of Securities
Donating appreciated securities, (stocks, mutual funds) directly to a Canadian charity offers superior tax benefits over donating cash you have available after selling those same securities. This is because the Canada Revenue Agency exempts taxpayers from paying capital gains tax on the increase in value of securities you donate. At the same time, the CRA still allows for a tax receipt for the full fair market value (FMV) of the donated securities, effectively maximizing your donation’s impact and your personal tax savings. Cash donations only provide a Tax receipt for the cash amount, whereas selling appreciated securities first triggers tax on 50% of the gain, reducing the donation amount available and increasing your tax bill.
Donating appreciated securities (In-kind)
- No capital gains tax: You are exempt from paying tax on the capital gain (the profit from the increase in value).
- Full Tax receipt: you receive a charitable tax receipt for the securities FMV at the time of donation.
- Higher impact: The full FMV goes to the charity, and you get a donation credit for that full FMV, making it a more efficient gift.
Donating Cash (After selling securities)
- Capital gains tax due: You must pay tax on 50% of the capital gain at your marginal rate.
- Reduced donation: The cash you donate is less than the fair market value because you have to pay tax on the capital gain.
- Lower tax receipt: The tax receipt is only for the net cash amount received after selling the securities and paying taxes.
Example Scenario (Simplified, for an individual in a 50% tax bracket)
- Securities: Bought for $10,000, now worth $50,000 (Gain of $40,000).
- Sell and donate cash: Sell for $50,000, pay tax on $20,000 (50% of the $40,000 gain is taxable). You are left with $40,000 after tax of $10,000 to donate.
- Donate securities directly: Donate the $50,000 stock. No capital gains taxes triggered, and you get a $50,000 donation receipt, maximizing the gift and the tax credit.
Key Takeaway: Donating securities directly is a strategic way to support charities and significantly reduce your personal tax burden, making it a win-win for the donor and the charity.
Two ways to donate:
- Complete and return Gift of Securities Form. Please note that this form is for Marigold Hospice Care records and does not initiate the transfer of the stock or securities. Once completed, instruct your broker to transfer your stock or securities to our brokerage account using the information on the form. Please notify anitah@marigoldhospicecare.ca before making this transfer.
For more information on how to donate, contact anitah@marigoldhospicecare.ca