Appreciated Securities

A donation of appreciated securities such as stocks, bonds or mutual funds is the most tax-effective way to make an outright gift to charity during your lifetime or after. Normally, when you sell these assets, you are required to pay tax on 50% of the capital gain. However, if you donate appreciated securities to a registered charity, none of the capital gain will be treated as taxable income and therefore you will pay no capital gains tax.

Benefits:

• They are liquid and usually very easy to value.
• Very attractive tax incentives.
• Satisfaction of seeing your donation put to good use during your lifetime or you can make the gift via your Will.
• No capital gains tax owing if gifted to a registered charity.
• If donated during your lifetime: receive an immediate charitable income tax receipt (for fair market value of the securities) that can be used to offset your current income.
• If donated via your Will: charitable income tax receipt will be issued to your estate (for fair market value of the securities), which can be used to offset taxes payable upon death.

Considerations:

• Appreciated securities must be transferred directly to the charity to take advantage of the elimination of the taxable capital gains. If you sell, and then donate the sale proceeds to charity, you will be taxed on 50% of the capital gain.

Fair Market Value:

Fair market value is based on the closing market price on the day that the charity receives the funds.