Giving Publicly Traded Securites
Many individuals hold shares of publicly traded corporations, bonds or mutual funds that have appreciated in value. Since May 2, 2006, the Income Tax Act has provided extra tax savings on capital gains for listed securities, if they are transferred to a charity as a gift in kind. Usually 50% of a capital gain must be taken into income on the sale of listed securities, but if they are transferred directly to a charity, none of the capital gain is taken into income.
Charities that do not have a trading account are not able to receive shares, bonds or mutual funds in kind. CCCC can receive your securities, convert them to cash and forward the gift to other charities you have selected. If you have a large portfolio and wish to benefit more than one charity, you may prefer to make a single transfer to CCCC and give instructions on how to distribute the proceeds of your gift to your chosen charities. One charitable donation receipt is issued to you by CCCC.
For an example of the beneficial tax treatment, let's assume that you want to make a gift of 100 shares that originally cost you $5,000. The shares trade at $80 at the time of your gift. If you would sell the shares and make a gift of the cash proceeds, the net cost of your gift would be $675 greater than if you make a gift of the shares (assuming a 45% combined federal and provincial rate). To illustrate the result, please see the following comparison:
| Cash Gift | Gift of Shares | ||
|---|---|---|---|
| Sell the shares and donate the cash | $8,000 | ||
| Gift of shares instead | $8,000 | ||
| Less your original cost | -5,000 | -5,000 | |
| Capital gain | 3,000 | 3,000 | |
| Capital gain rate | 50% | 0% | |
| Reportable capital gain for tax purposes | 1,500 | 0 | |
| Assumed tax rate | 45% | 45% | |
| Tax on reportable capital gain | 675 | 0 | |
Net cost of gift to you: |
|||
| Original cost | 5,000 | 5,000 | |
| plus Tax on capital gain | 675 | 0 | |
| minus Tax Credit (8,000 x 45%) | -3,600 | -3,600 | |
| Net cost of your $8,000 gift | $2,075 | $1,400 | |
Click here for common questions about gifts of listed securities.
If you're ready to give a gift of securities, you can use the CCCC Community Trust Fund now.
If you have any questions or need help with the forms, please email us.
The purpose of CCCC Stewardship Services is not intended to replace legal and other professional advisers. The goal is to provide Christians with information based on biblical principles to enhance the stewardship of resources entrusted to them.
The CCCC Seal of Accountability indicates that a charity adheres to high standards. Look for the Seal of Accountability when making decisions about which Christian charities to support.
