Win Win: A Tax Smart Gift

We’ve been are experiencing the longest bull market in stock market history. It is three months older than the tech bull market that ended in 2000, and its duration is more than twice as long the average bull market length of 57 months. These facts combined with the time of year mean it is an excellent time to think about portfolio rebalancing and tax smart planning.

When you donate securities directly to Spinal Cord Injury Ontario you will pay no capital gains tax on the appreciated value of your securities and you will receive a tax receipt for their market value. Your gift will result in a tax credit that will reduce your income taxes in the year of your gift – or you can carry it forward for up to five years. Tax advantages of gifts of securities.

Suppose you sold a stock that you bought for $4,000 and it is now worth $10,000. You would have to pay tax on your capital gain. If your marginal tax rate is 43.41% you would owe $1,302 in taxes. Suppose instead that you donate the stock directly to Spinal Cord Injury Ontario. You would have to pay $0 tax on your capital gains. You would receive a tax receipt for the entire $10,000. At a 43.41% marginal tax rate you would receive a tax credit of $4,341 that can be applied anytime within five years. If you were to add the tax saved by not having to pay the capital gains tax ($1,302) your total tax savings would be $5,643.

In this example a generous donation of $10,000 is made for a cost of $4,357.

Donating securities is easy. Once you have consulted your professional advisors for an approach that ensures your donation maximizes your tax advantage then all you need to do is:

1. Let us know about your gift at 1-877-422-1112, ext. 214 and we will send you a Securities Transfer Form.
2. Fill in the form – it’s a simple one page document.
3. Send the form to your professional advisor, bank or investment firm and they will send the securities to Spinal Cord Injury Ontario’s account.

How is the market value of my gift determined?
The market valuation for the tax receipt will be the greater of the unit closing price, or the avera delay the start of the transfer process and may affect the receipt value.

Are there limits on the donation?
There is no limit on the size of your donation, however the maximum amount of all donations an individual can claim on their tax return each year is 75 per cent of net income.

Which securities can I donate?
Gifts eligible for this preferred tax treatment include any of the following securities: Stocks, Bonds, Mutual Fund Units, Warrants, Bills and Futures that are listed on the stock exchanges prescribed by Canada Revenue Agency. In general the best strategy is making a gift of securities with large capital gains from non-registered accounts (not held in an RRSP, RRIF, or TFSA). Your professional advisor can help you make the best choices that consider your unique circumstances with respect to portfolio rebalancing and optimal tax planning.

Your support will help fill gaps in service and funding from the provincial government and play an essential role in the empowerment of people living with a spinal cord injury. Your generosity will provide knowledge, support and services based on 73 years of expertise.