Gifts of Publicly Traded Securities
Since the mid to late 1990s, one of the most common ways for individuals to make larger gifts to their favourite charities has been by way of transferring appreciated publicly traded securities directly to those charities. In 1997 the Federal Budget included a proposal that increased the tax savings associated with the gifting of appreciated publicly traded securities. Publicly traded securities include shares, bonds, bills, warrants, mutual funds and futures that are traded on Canadian and most other foreign stock exchanges. The budget legislation reduced the taxable portion of any capital gain resulting as a consequence of gifting publicly traded securities to a public charity, such as the Alberta Cancer Foundation, from 50 per cent to 25 per cent. Then, in May of 2006, the capital gains inclusion rate for gifts of publicly trade securities to public charities was eliminated.
Tax BenefitsA gift of appreciated publicly traded securities to the Alberta Cancer Foundation can provide a significant tax benefit to a donor or their estate. For many charitably minded individuals, much of their wealth is invested in stocks, bonds and mutual funds. Selling or transferring those invested funds automatically resulted in a capital gains tax owing if the securities were appreciated. Now, by transferring those same securities directly to a charitable organization, all capital gains taxes are eliminated and the full value of the tax receipt can be used to offset taxes owing on other income. Similarly, if the gift is made through the individual’s will, their estate will get a tax receipt for the fair market value of the gifted publicly listed securities and won’t have to declare any of the capital gains as income. If the total receipt cannot be used for tax purposes on the donor's final tax return, the excess may be carried back to the previous tax year and used to claim a refund. Note: You must transfer the securities directly to the Alberta Cancer Foundation to realize the tax savings. If you sell the shares first and then make a gift of cash, you will be taxed on 50 per cent of the capital gain. Next stepsIf you would like to make a gift of publicly-traded securities to the Alberta Cancer Foundation, please contact us. The process is relatively easy but does require that we provide a form to you or your broker. An Alberta Cancer Foundation Gift Planning Officer would be happy to assist you.
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