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Gift of Securities

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A gift of publicly traded securities can provide you with the unexpected capacity to make a meaningful difference at Soldiers’. In 2006, the Government of Canada eliminated the capital gains tax on the donation of certain publicly-traded securities, including stocks, bonds, mutual funds, and exchangeable securities. This means that making a direct donation of securities to the Foundation is now the most effective way of minimizing taxes while supporting the future health of your community.

 

The Benefits

  • Capital gains tax on publicly listed stocks and securities are exempt when you donate shares to a registered charity
  • The value of your tax receipt will be based on the market closing price on the day the Foundation takes legal receipt of your stock or securities
  • You can support Soldiers’ through an unrestricted donation, or designate your gift to a particular program or area of interest to you

 

How Does it Work?

Making a gift of securities to the Foundation is very easy.

  1. When you contact us about your gift, our staff will provide you with our Gift of Publicly Listed Securities transfer form, which will help initiate the transfer of securities. You can directly download the transfer form here.
  2. You will need to complete the form and submit it to your broker or financial advisor to initiate the process. Please also advise the Foundation of the pending transfer by forwarding a copy of the form to us. A copy of the completed and signed form is required to ensure timely processing of your gift and to issue a charitable tax receipt.
  3. You will receive a tax receipt based on the closing price on the date when the shares are transferred to the Foundation’s account.

 

Case Study

Here’s the difference between donating shares directly rather than writing a cheque after selling the shares. In this example, the donor is considering a gift of shares worth $25,000, with the original purchase price of $5,000. This donor makes $143,000 in income per year and as a result has a 46% marginal tax rate.

 

 

Sell and Then Donate

Donate Securities Directly

Original Cost of Securities

$5,000

$5,000

Current Market Value

$25,000

$25,000

Capital Gain

$20,000

$20,000

Tax on Capital Gains (Assuming marginal tax rate of 46%)

$4,600

$0

Donation Amount (after tax)

$20,400

$25,000

Charitable Tax Credit

$9,384

$11,500

 

If the donor sells the shares then donates the money to the Foundation, they unnecessarily pay $4,600 in taxes and get a $9,384 tax credit. Alternatively, if the donor donates the shares directly to the Foundation, they pay $0 in taxes and get a bigger tax credit of $11,500. The Foundation also receives a larger donation amount in the second scenario.

This makes the most sense, especially if you are sitting on highly appreciated shares where most of the sales proceeds could be capital gains.

 

Gift of Securities Transfer Form