We all have charitable causes that are close to our hearts and Canadians are a generous people – the third most giving in the world - but did you know there can be tax advantages to your charitable donation over and above the tax credit available?
If you own publicly traded securities, like stocks, mutual funds or bonds with an unrealized capital gain you can donate them in-kind to the registered charity of your choice. In doing so you would eliminate the taxable capital gain that would result from selling the security and get a tax credit for the full amount.
If you own a security with a large imbedded capital gain and were planning to sell to fund a purchase or to reinvest you can donate some of the shares to off-set the tax owing on the balance of the shares.
Charitable donations can be carried forward for five years. The first $200 of donations is eligible for a 15% tax credit while combined donations in excess of $200 qualifies for a 29% tax credit and if you are subject to the highest federal tax bracket there are further enhancements to the credit.
The donation in-kind strategy works for public and private foundations as well. And planned giving to provide tax advantages to your estate as well as insurance strategies are further ways to help out and reduce the tax liability for your heirs.
These strategies are important for donors and tax-payers to know and understand but also helpful for those who work with and for charitable organizations. Please call me to talk about how to present this to your donors and how to set up your organization to receive donations in-kind.
Hope you’re enjoying your summer,
Look for me on Facebook – H.J. LeBar of the Harper Wealth Management Group of RBC Dominion Securities or LinkedIn – Heather J. LeBar, for more frequent updates.