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Gifts of Securities

  • Gifts of Securities

    Publicly traded securities include stocks, bonds and mutual funds containing stocks listed on approved stock exchanges. They make excellent charitable gifts. They are liquid and are usually easy to value. And, the tax incentives are very attractive.

    Benefits to you?

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    Jonathan Grant

    As a donor you can choose to receive the satisfaction of seeing the gift at work now, or you can create a legacy gift.

    You receive an immediate donation receipt for the full fair market value of the donated securities if the organization if a registered charity. None of the capital gains on the disposition of appreciated securities transferred directly to the organization is taxable.

    Corporate donors will benefit from a tax deduction and in some circumstances benefit from an increased addition to their capital dividend account.

    Who can give securities?

    Donors of all ages who hold securities and can afford to donate some to charity. You may wish to simplify your estate, divest some holdings, or reduce taxes now. By planning your gift you can make your gift earlier, and reduce the size of your estate and thereby future probate costs. Employees of publicly traded companies may wish to donate shares through the exercise of employee stock options if the company and the stock market are doing well.

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    Debbie Kelsall

    How can I give securities?

    You instruct your broker to transfer (not sell) the securities directly from your account to the organization’s investment account. The transfer is carried out electronically. Alternatively, you may donate by endorsing the security certificates and delivering them to the organization, or by signing a stock power of attorney form and then separately delivering the signed form and the securities to the organization.

    For receipting purposes, the organization usually uses the market closing price on the day the securities are transferred to it. Please check with the organization. 

    An important consideration!

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    Jonathan Grant

    To take advantage of the elimination of the taxable capital gains, you must transfer the securities directly to the organization. If you sell, and then donate the sale proceeds, you will be taxed on 50% of any gain.

    Planned gifts can provide beneficial results for a donor but, in order to ensure that all relevant issues have been considered and addressed and that all Income Tax Act, Canada provisions and regulations are met, prospective donors should seek qualified legal and accounting advice.


    Give Green Canada acknowledges and thanks Lorna Somers and Frank Minton for pre-approving the use of their book Planned Giving for Canadians as the basis for the information provided about different types of gifts.
     


     

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