Ways to Give
Making a Gift for Today–Donating Securities
Seeing your stock, bond or mutual fund grow should be pleasing. Unfortunately, when you cash in any of these forms of investments they become a form of taxable income. You can minimize the financial impact this will have while benefiting from tremendous tax incentives recently introduced by the Federal Government by donating your publicly listed security directly to The Children’s Foundation.
Giving Reduces Capital Gains Tax
Prior to the budget change brought down on May 2, 2006, gifts of appreciated securities made to charities, excluding private foundations, had a reduced capital gain tax rate of 25%.
While the donor receives a receipt credit based on the full market value of their security, they were still required to report 25% of the gain. The new tax change means there is no capital gain to be paid!
Now, when donating a gift of securities directly to a charitable organization such as The Children’s Foundation, the entire capital gain is eliminated. This mean that there is no need to calculate the reportable capital gain and the tax credit the gift triggers can be used to offset other income tax that you may be obligated to pay.
The types of investments that qualify include: shares, bills, warrants, mutual funds and futures, listed on stock exchanges. Also included are both RRSPs and pension plan benefits.
Making a Gift
Making a gift of securities to The Children’s Foundation is very easy. For example, Mr. J. Smith purchased ABC Company stock some years ago. The stock has a Fair Market Value (FMV) of $10,000 and his cost was $2,000. He has made recent charitable donations to The Children’s Foundation and has decided that he would like to make a substantial gift. When looking at his stock portfolio, he decided to give his ABC Company stocks as a gift. His combined federal and provincial tax rate and charitable tax credit are both 50%. Here is an example of the real cost of giving the stock instead of selling the stock and donating the cash:
| Option 1: Sell Stock & Donate Cash | Option 2: Donate Stock Directly | |
| Value of stocks | $10,000 | $10,000 |
| Cost base | $2,000 | $2,000 |
| Capital gain | $8,000 | $8,000 |
| Taxable capital gain | $4,000 | $0 |
| Tax credit (50% x $10,000) | $5,000 | $5,000 |
| Tax on gain | $2,000 | $0 |
| Tax Saving | $3,000 | $5,000 |
For more information about securities gifts please consult your professional advisors or call Ed Sluga at 519-826-9551 or email him at ed.sluga@childrensfoundation.org
Making a Gift for the Future–You can help through planned gifts
Planned gifts are a method of supporting The Children’s Foundation of Guelph & Wellington (CFGW) through gifts that are created with tax and estate planning in mind and may be either donated now or established to benefit CFGW at some time in the future. Gifts may include a bequest in your will, a life insurance policy or publicly listed securities among other gift strategies.
Anyone can make a planned gift. Whether you choose to make a one-time current gift or provide for a future legacy, you will share in our mission of supporting the hope for a safer community.
Working with CFGW to establish a planned gift can, in many cases, result in tax advantages for you. This may not be the only factor in helping you reach your decision, but it can influence how you and your financial advisor structure your plan.
Become a supporter of families and children in our community
Bequest Make a gift of cash or property by including CFGW as a beneficiary in your will. It is one of the simplest planned gifts to arrange and it can significantly reduce your estate taxes. In the year of your death, Canada Revenue allows you to give charitable gifts of up to 100% of your estate’s Net Income for the year in question. Any excess can be carried back one year to save on that year’s taxes (also up to 100% of your net income).
A varying but substantial portion of every $100 contributed to a charity is saved from the combined federal and provincial taxes owed by your estate. A charitable gift is a highly recommended tax saving strategy to offset taxes arising from capital gains.
Life Insurance Make a substantial gift by naming CFGW as the owner or beneficiary of a fully paid-up life insurance policy. Often, individuals have life insurance policies that are no longer needed for their original purpose. By making the beneficiary of the policy CFGW, you can provide for the future needs of CFGW in a substantial way and provide your estate with significant tax savings.
Gifts of life insurance are deemed to fall outside your estate so they will not be subject to probate. The Children’s Foundation of Guelph & Wellington will provide your estate with a tax receipt based on the total of the gift which can help offset taxes your estate may be forced to pay.
For more information about planned gifts, please consult your professional advisors or call Ed Sluga at 519-826-9551 or email him at ed.sluga@childrensfoundation.org
