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!
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%.
Not what you’re looking for?
Check out other ways to support Hillel Ontario.
Any questions or concerns? Reach out to Katie Goldig, Manager of Community Philanthropy at 416.913.2424 ext. 6
In this example, the donor realizes savings of $9,200 ($36,200 – $27,000) by donating appreciated property instead of selling it and donating the proceeds. The difference is a result of the eliminated capital gains tax on the donated securities. The best part is you still receive a tax receipt for the full market value of the security in the amount of the closing trading price on the day Hillel Ontario receives the security. This multiplies the impact of the tax benefit of your charitable giving.
How long will it take for my donation to reach Hillel Ontario’s Brokerage Account?
Depends on the type of security. Most securities take a few days to get to us once you’ve submitted the Letter of Authorization to your financial advisor. Other securities, such as mutual funds can take up to a few weeks to settle.
How much can I donate?
You are legally allowed to claim charitable donations up to 75 per cent of your net income. However, you are also allowed up to five years to carry forward on any unused donation amount.
How can I learn more?
Before donating any securities, we recommend you discuss with your financial advisor. Anna Kissin is our Major Gifts Officer and would be happy to chat with you. Please reach out to her by email at email@example.com. She may put you in touch with our two advisors at Stovel Asset Management:
Parker Cumming, CIM
Alicia Vogan, CFA