There has been a lot of attention on the ups and downs of the market. Generally people who are heavily invested in the market feel good when their shares go up and not so good when their shares go down. Those wanting to buy shares don’t mind the price coming down as it will make it cheaper for them to purchase shares. Although charities worry that a downturn in the market will result in a precipitous drop in donations, the US statistics over the last few decades show that has not happened. Irrespective of the ups and downs of the market the needs remain and philanthropists understand that a worsening economy may result in an increase in the needs.
Donating public company shares such as BCE, RBC, ScotiaBank, etc when they are worth more than you paid for them, whether a little more or a lot more, is a tax effective way to donate to your favourite charity.
How it works - if you have public company shares that have increased in value then it is more tax efficient to donate the actual appreciated shares to a charity, rather than selling the shares and then donating the after tax cash proceeds of the sale. Some people in Ontario if they sold shares would have to pay up to 23% tax on the amount the shares have appreciated in value, but if you donate the shares to a registered charity you pay no capital gains tax on the appreciations and also get the normal tax benefit of an official donation receipt. The effect of combining this special concession with the official donation receipt results in a donor getting a greater tax credit for their donation. This advantage of donating appreciated public company shares applies to donations to registered charities. It does not apply to shares of privately held companies. The larger the amount that the public company share have appreciated, the greater benefit this type of planned gift provides. The advantage of gifts of appreciated marketable securities, in addition to their tax effectiveness, is the ease with which they can be completed.
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Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.