You are no longer subject to capital gains tax when you donate publicly traded securities to qualified charities. You are also still entitled to receive a charitable tax receipt for the fair market value of the securities donated. As a result, donating securities to United Way of Peel Region may produce a greater tax benefit than selling the shares first, and then donating the cash. The following exchangeable shares are eligible:
- Shares, rights, bonds or debentures listed on a designated stock exchange
- Shares of a Canadian public mutual fund corporation
- Units of a widely held Canadian mutual fund trust
- An interest in a segregated (insurance) fund trust
- A bond or debenture issued or guaranteed by the Government of Canada or one of the provinces
- Tax Advantages — By donating your appreciated securities or mutual funds directly to United Way of Peel Region you can eliminate your capital gains tax bill.
- Reduced Brokerage Fees — Many brokerage houses forego fees for charitable transactions.
- Simple and Convenient — Securities are easy to transfer. Your broker transfers the shares from your account to United Way of Peel Region’s brokerage account.
- Opportunity — An opportunity to make a greater difference in your own community.
- Recognition — Your gift can be honoured during your lifetime.
The securities must be transferred to United Way of Peel Region and not be sold by the donor. The gift will not qualify for the reduced capital gains tax if the securities are sold and the cash then gifted. A charitable tax receipt is issued for the fair market value of the security on the date of transfer. Here is a simplified example to illustrate the benefits. The first option involves selling the shares and then giving the cash to United Way of Peel Region. In the second option, you transfer the shares directly to United Way of Peel Region. Click here to download transfer forms.
An example of the tax benefit of donating shares to United Way of Peel Region*
Sell shares and donate cash
Donate shares directly
|Fare Market Value of Security (a)|
|Cost base of Security|
|Taxable capital gain 50%|
|Capital gains tax due (b) 46%|
|Donation tax credit (c) 46%||$46,000||$46,000|
|Total cost of donation|
(a) + (b) - (c)
|Savings of Donating Securities vs. Cash||$11,500|
* Assumes a marginal income tax rate of approximately 46% (varies by province).
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