Gifts of securities or stocks
Gifts of securities or stocks
Gifts of securities are the most tax-effective way to make a donation—providing tax benefits while helping neighbours in need.
Gifts of appreciated assets, such as securities, may provide you with even greater tax benefits than charitable gifts made in cash. Did you know that you can donate appreciated securities without paying any tax on capital gains? We asked our friends at TD to explain the value of giving to United Way East Ontario through gifts of securities or stocks.
"Donating publicly-listed securities that have appreciated in value is generally more tax efficient than donating cash. Any capital gains on the appreciated securities that are donated to a charity, such as United Way East Ontario, are eliminated, yet you receive a charitable tax receipt equal to the fair market value of the appreciated securities. Normally, 50% of the capital gains would be taxed as income.
If you believe that the securities have an upside potential, you can donate them and then re-purchase them immediately. If you do so you will (a) avoid paying capital gains tax on your profits to date, (b) receive a charitable tax receipt resulting in a tax credit, and (c) have ‘stepped up’ the adjusted cost base of the securities. A higher cost will reduce your capital gains when you sell your securities later on."
If you believe that the securities have an upside potential, you can donate them and then re-purchase them immediately. If you do so you will (a) avoid paying capital gains tax on your profits to date, (b) receive a charitable tax receipt resulting in a tax credit, and (c) have ‘stepped up’ the adjusted cost base of the securities. A higher cost will reduce your capital gains when you sell your securities later on."
Jo-Anne Ryan
Vice President, Philanthropic Advisory Services
TD Wealth
TD Wealth
Save on your income taxes
Donations of stock shares, mutual funds or other forms of securities are all eligible for tax credits for their full current market value. To illustrate, here are two hypothetical scenarios:
How to donate gifts of securities or stocks
- Authorize your broker to transfer the securities or stocks to United Way’s broker account and to let United Way know that this donation is from you.
- Your shares will be sold immediately by United Way. A tax receipt and acknowledgment letter will be issued for the market value on the date of transfer. A United Way representative may call to verify the information.
Please speak with your financial advisor about the tax benefits of donating shares.
For more information about gifts of securities or stocks, please contact us today.
