Donate Securities

Donating Securities to EBC (bonds, share, mutual fund units) held in a cash or investment account with a broker, can provide a tax advantage.

Budd Nature Reserve

To illustrate compare two gifts to a charity.

A $1,000 gift by cheque or credit card allows the donor to claim that charitably receipted amount against income taxes and they will typically receive a tax credit of $400. (The amount varies with their marginal tax rate and whether their total donations exceed 20% of their income; but 40% is a reasonable number for most people.) A $1,000 gift by cheque or credit card has an after- tax cost of about $600 for most people.	A $1,000 gift of securities receives the $400 charitable tax credit. And, (if the donor held the securities for at least two years), the capital gains tax is waived. For a taxpayer with a marginal tax rate of 40%, and for a capital gain of $400, (e.g. they bought the shares for $600 and they are now worth $1,000) the additional tax saving is 20% of the $400 capital gain or an extra $80.
Instead of a $600 after tax cost for the gift, the after-tax cost is $520. Again, this will vary with the donor’s marginal tax rate, the size of the capital gain and whether they have donated more or less than 20% of their income to charity in that tax year.

A $1,000 gift by cheque or credit card allows the donor to claim that charitably receipted amount against income taxes and they will typically receive a tax credit of $400. (The amount varies with their marginal tax rate and whether their total donations exceed 20% of their income; but 40% is a reasonable number for most people.) A $1,000 gift by cheque or credit card has an after- tax cost of about $600 for most people.

A $1,000 gift of securities receives the $400 charitable tax credit. And, (if the donor held the securities for at least two years), the capital gains tax is waived. For a taxpayer with a marginal tax rate of 40%, and for a capital gain of $400, (e.g. they bought the shares for $600 and they are now worth $1,000) the additional tax saving is 20% of the $400 capital gain or an extra $80.

Instead of a $600 after tax cost for the gift, the after-tax cost is $520. Again, this will vary with the donor’s marginal tax rate, the size of the capital gain and whether they have donated more or less than 20% of their income to charity in that tax year.

In this example, a person can give $1,080 in securities and have the same income after tax as if they had given $1,000 by cheque. Or they can give $1,000 and have $80 more after tax income. Or they can split the difference. The choice is theirs. Whatever you choose, and however you choose to help, EBC appreciates the gift and will put it to good use in conservation.

In general, gifts of securities should come from a cash or investment account, not an RRSP. Donors giving securities should have their investment adviser advise on which securities should be given and help complete the required form (download it here).