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As the end of the year quickly approaches, it is worth keeping in mind that a gift of publicly traded securities is a great opportunity to make a tax efficient gift to support the Jewish Foundation of Greater Toronto.
By donating publicly traded securities with accrued gains directly to a registered charity, not only will the donor receive a charitable tax receipt for the fair market value of the securities, he or she will also eliminate the capital gains tax that would have been payable if such securities were sold on the market. This technique allows a donor to make the same donation to the Jewish Foundation but at a lower net cost. Alternatively, this technique would allow a donor to make an enhanced gift for the same net cost. In order for such technique to work, the publicly traded securities must be donated directly to the registered charity.
Donating securities is also an effective technique for a donor who does not necessarily wish to dispose of certain securities. A donor can always gift the securities with accrued gains and then repurchase them with the result being that he or she would then hold the same securities but with full cost base, thereby reducing the taxable gain when they are ultimately disposed. The donor would still receive a charitable tax receipt to shelter other income.
This technique works for both individuals and corporations. There are additional advantages for a private corporation to donate publicly traded securities in that 100% of the gain would fall into the corporation's capital dividend account (known as "CDA"), instead of the usual 50%.
Please note that there are special considerations pertaining to the gifting of flow-through shares.
The staff at the Jewish Foundation are ready to assist you and your clients in structuring such gifts.
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