Stocking Up on Hillel Ontario

Stock donations are a great way to contribute to Hillel while enhancing your tax benefit. 

Hillel Ontario works with Stovel Asset Management, a division of RBC Wealth Management

To encourage charitable giving, the government provides you with a tax credit when you make a personal donation to a registered charity. This donation tax credit can be used to reduce your taxes payable.

Generally, when you gift property (including stocks, mutual funds and related securities in a non-registered portfolio), the property is deemed to have been disposed of at fair market value (FMV). As such, you may realize taxable capital gains if the property has increased in value since you first acquired it. The capital gains triggered when donating securities may be eliminated in some cases if you donate the securities in-kind.

In order to qualify for the elimination of capital gains, the donated securities can be:

• Shares, debt obligations or rights listed on a designated stock exchange;
• Mutual funds;
• Interests in related segregated fund trusts; or
• Government of Canada or provincial government bonds.

If you’re still bullish on the stock you just donated, considering buying it back at the fair market value at the time of the donation. This will adjust your cost basis upwards, thus reducing your potential capital gains when you do ultimately cash in. 

Donating Stocks instead of cash allows you to donate more while costing you less!

The Mechanics

When you donate securities in-kind, you may benefit from the elimination of the capital gain accrued on the securities plus the donation tax credit. As such, it may cost you less to make a donation of securities than a donation of cash.

The following example illustrates this point by comparing two alternatives for donating shares of a publicly traded company with a fair market value (FMV) of $50,000 and an adjusted cost base (ACB) of $10,000 to Hillel Ontario. The donor’s combined federal and provincial marginal tax rate is 46% and the donor is also entitled to a combined federal and provincial donation tax credit at a rate of 46%.