This type of donation is called a gift in kind, which means it is a non-cash donation. The amount of the charitable tax receipt is based on the market value of the securities the day the charity receives the fund.
When you sell stocks that have appreciated in value, 50% of the capital gains must be reported as income. Donating those same securities to Shine Through The Rain Foundation reduces the capital gains to zero. You will also receive a charitable tax receipt for the full market value. In order to eliminate the capital gains, the shares must be transferred directly to Shine Through The Rain Foundation.
How to Donate Your Securities
You can choose to donate your securities to Shine Through The Rain Foundation’s general operating fund or you may choose to designate your gift to support one of our projects. The process of transferring ownership of securities to the Foundation is simple. Your financial advisor completes a form and sends it to Shine Through The Rain Foundation’s offices. For copies of the form and more detailed information on the benefits of donating securities, contact Shine Through The Rain Foundation offices.
Selling Shares versus Donating Shares
The 2006 federal budget eliminated the capital gains tax on donations of publicly listed securities. This is good news for our communities and the people who support the work of Shine Through The Rain Foundation.
In the illustration below, assume you have invested $1,000 in Acme shares. Those shares are now worth $5,000. If you donate those shares to Shine Through The Rain Foundation you will receive an income tax receipt for $5,000. Compare this with the tax consequences of selling the shares and donating the proceeds versus simply donating the shares to Shine Through The Rain Foundation.
|Sell your securities and donate cash to The Foundation||Donate your securities in-kind to The Foundation|
|Fair market value of securities||$5,000||$5,000|
|Cost of securities||$1,000||$1,000|
|Capital gains realized||$4,000||$4,000|
|Taxable capital gain||$2,000 (50%)||$0|
|Taxes payable (assume 46%)||$920||$0|
|Tax credit* (assume Ontario resident)*Donation tax credits may be carried forward for the next five years.||$2,300||$2,300|
|Net Tax Reduction||$1,380||$2,300*|
Note: For more information about charitable tax credits, please visit the Canada Revenue Agency web site at www.cra-arc.gc.ca.
The information provided above is for illustration purposes only. Please consult your financial and/or legal advisor for tax-effective giving that is most suitable for you.
For more information, please contact:
Major Gifts & Planned Giving
Shine Through The Rain Foundation
1211 Gorham Street, Unit 12, Newmarket, ON L3Y 8Y3
Phone: (905) 477-7743 Fax: (905) 477-4251
Federal Registered Charity, ID number 891881005RR0001