Why Give the Gift of Securities?

Donations of publicly listed securities to the PECMHF are exempt from all capital gains taxation. 

"My wife and I have a comfortable portfolio of securities accumulated over many years of fortunate investing. We have felt a responsibility to support our local hospitals and learning institutions. When coming to Picton, I spent some time with our doctor and the mayor, inquiring about PECMH and the need for public support. It was obvious from both men that there was a need - that the hospital was well run and served the community very well, but always required public funding. The refurbishing of the ER was a good sign of both public and government support.
I investigated the best way to donate was through the transfer of stock - rather than cash. This way the Hospital Foundation would benefit from the full amount and we would not be faced with capital gain taxes. It was a joint venture as my wife and I share our trip through life as true partners!"
- Paul Van Vlack

- In 2009, Mr. Van Vlack and his wife Trudy donated 1,000 shares of Bank of Nova Scotia totaling more than $45,000.00 to advance health care for the people of Prince Edward County.


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 or a public foundation, such as a community foundation, or a private foundation.

The benefits of these gifts include:

• Immediate donation receipt for the fair market value of security (determined by the closing price on the date of the gift).
• Exemption from capital gains taxation.
• Charity pays no tax on sale.
• Gifts can be given during donor’s lifetime or after, through their estate.
• A reduction of your income tax can be used in the year of donation, or any unused portion can be carried forward for up to five years. 

Example (How a gift of publicly listed securities can benefit you and PECMHF.):

Mr. X is considering a $100,000 donation to PECMHF and has sufficient net income to claim the full amount of the donation in the year in which it is made.  Among his assets are shares from a publicly listed corporation valued at $100,000. Mr. X is in the top tax bracket (for the purpose of this example assume 50%). 

	Sell securities and donate proceeds	Donate securities
a) Proceeds of sale/donation	$100,000	$100,000
b) Initial cost of investment	$ 1,000	$ 1,000
c) Capital gain (proceeds less cost)	$99,000	$99,000
d) Taxable capital gain	(c x 50.0%) $49,500	0
e) Donation tax credit	$50,000	$50,000
f) Tax on capital gain	(d x 50%) $24,750	0
g) Net tax benefit from donation	(e - f) $25,250	(e - f) $50,000

 

Mr. X will receive a greater net tax benefit by donating the publicly traded securities directly to PECMHF instead of selling the securities and donating the proceeds.

 

Note: This illustration is for information purposes only. Please consult your financial and/or legal advisor to plan your own tax-smart gift that best meets your personal situation.