Professional Advisors Reference Manual and Resource Guide – Copyright 2006
Donations of Appreciated Securities
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Donations of Appreciated Securities
History
• On May 2, 2006 the Conservative government eliminated capital gains tax on
donations of publicly listed securities to charities, effective immediately. On
March 19, 2007, the government extended this measure to include private
foundations.
• In 1997 the federal government reduced capital gains tax on donations of stock
by 50 per cent on a five-year trial basis. The result was a three-fold increase in
gifts of publicly traded securities to charities – from $69.1 million to $200.3 million
between 1997 and 2000. The percentage of stock donations jumped from 1.6% to
3.9% of all donations. In 2001, the government made the capital gains reduction
permanent.
• A recent TD Economics report shows Canadians hold $1.3 trillion in stocks – almost
half of which are unrealized capital gains. The elimination of capital gains on
donations of appreciated securities to charity could unleash a windfall of giving.
How it Works
Usually, one-half of a capital gain is subject to tax; with gifts of publicly-listed
securities, that amount is eliminated when the gift is made to a charitable
organization, a public foundation, such as a community foundation11, or a
private foundation.
Listed securities include:
• Shares, rights, and debt obligations listed on most Canadian and certain foreign
stock exchanges2
• Prescribed debt obligations
• Shares of the capital stock of a Canadian public mutual fund corporation
• Units of widely held Canadian mutual fund trusts
• Interests in related segregated fund trusts
NOTE TO READER:
The purpose of this
publication is to
provide general
information, not to
render legal advice.
In addition any
changes in the tax
structure may affect
the examples listed
in this information.
Your client should
consult their own
lawyer or other
professional
advisor about the
applicability of this
information to their
situation.
1 Publicly-listed