Securities

The Federal Budget, passed May 2, 2006, provided a provision for the complete elimination of the capital gains tax on gifts of publicly listed securities to registered charitable organizations. This new provision offers an opportunity for donors to realize very significant tax savings when making a gift of appreciated securities to Community Living Oakville.

There has never been a better time to make a donation of qualifying marketable securities, including most shares, bonds, warrants and options if listed on a prescribed stock exchange, and mutual funds. The gift must consist of securities transferred from the taxpayer's brokerage account to the charity's brokerage account and must not be made to a private foundation. At no time can the securities be sold and cash realized by the taxpayer and then donated. The current Canadian income tax rules do not tax the investment value until the security is sold.

The following chart compares the net benefit of donating qualified securities versus cash to Community Living Oakville.

	Sell shared Donate then donate shares cash	Donated Shared
Donated Amount	$25,000	$25,000
Non-refundable tax credit received	$11,500	$11,500
Reduction to Capital Gains tax (assumes nil cost)	N/A	$5,750
Tax assistance received (based on highest marginal tax rate of 46%)	$11,500	$17,250
Net cost of donation to donor (does not include original purchase cost of share)	$13,500	$7,750

It is important to remember that if an individual sells appreciated securities during their lifetime, or if these assets are liquidated through their estate after their death, tax must be paid on 50 percent of the capital gains on those securities. This new provision provides an opportunity for donors to eliminate a significant tax liability that would otherwise eventually have to be paid.

The type of planning that is necessary when dealing with marketable securities and charitable entities requires professional advice. Each taxpayer's situation is unique, and consequently a consultation with a financial planner or investment advisor is recommended.

To make a donation of stock and securities to Community Living Oakville, please contact Tina Christie at (905) 844-0146, ext: 239