Last weekend, I went back in time in celebration of my alma mater. The University of Guelph celebrated it’s 50 year anniversary with an extraordinary Conversat Ball that started with a Gala dinner in the heart of campus followed by an evening of entertainment across campus; the British Invasion where we danced to tunes from the 60s, Casablanca offering the best of Morocco in the 40s, Speakeasy where I gambled (with fake money) to jazz music and a peak into the future through a black hole to a futuristic galaxy rocked by God Made me Funky.

                                                                             

If celebrating the University’s rich history wasn’t reason enough, it was also a final farewell to our incredible leader and change agent, Alastair Summerlee, who after 11 years as President is retiring. Alastair leaves the University having left a larger than life footprint (pun intended for those who know him) – in addition to his many accolades and accomplishments, he beams at the success of the BetterPlanet Project – which surpasses it’s $200-million goal!

 

The BetterPlanet Project strives to make our world a better place. Thanks to the many generous donations, the project will enhance teaching, learning, research and innovation to answer some of the world's most perplexing problems in areas where the University of Guelph excels: Food, Environment, Health, Communities.

 

I was speaking with a client of mine earlier this week (who also happens to be a Guelph Alumnus) and we got to talking about the idea of charitable giving. He was intrigued to learn that you can gift shares instead of cash, suggesting he never knew that he had the option, so I’ll share the strategy with you all.

 

When you donate a publicly listed security with accrued capital gains, you benefit from the elimination of the capital gain plus the donation tax credit. The combined tax savings can be quite impressive. Click here for an article which includes a sample calculation illustrating a $9,200 savings on a $50,000 donation.

 

This example demonstrates that there are tax savings to be realized by donating publicly traded securities with appreciated gains as opposed to first selling the publicly traded securities and then donating the proceeds. This means it costs you less to make a donation of securities instead of a donation of cash.

 

This favourable tax treatment also extends to the donation of stocks acquired through your employee stock options to eliminate the taxable benefit of your earnings. Read more here.

 

While donating appreciated securities is attractive for tax purposes (since the capital gain is eliminated) you can also employ this strategy during times of a market downturn. Year-end tax planning often involves tax loss selling and charitable giving as two popular strategies that may be used to reduce your tax bill. Combining the two strategies is possible as in-kind donations of depreciated securities do trigger the capital loss for tax purposes and result in a donation tax credit equal to the market value of the security donated. The capital loss triggered is not eliminated and can be applied first against any capital gains realized in the same year with any remaining net capital losses being carried back and applied against capital gains from the previous three years, or carried forward and applied against capital gains realized in the future - pretty awesome, actually.