Gifts of Appreciated Securities

Only gifts of these qualifying securities are eligible for favourable tax treatment: shares, bonds, warrants, options listed on a prescribed stock exchange, mutual fund shares/units, segregated fund units, and prescribed debt obligations. The actual securities must be transferred to the Foundation. The gift will not qualify for favourable tax treatment if the securities are sold and then proceeds gifted to the Foundation.

The following example illustrates the different savings realized through two different gift paths:

Donor A ?? Cashes in stock and make a cash donation
Donor A has stock valued at $10,000. She bought this stock when it was only $2,000 so her capital has gained in value by $8,000. She has her broker cash in the stock, calculates 50% of the gain to be $4,000 and ?? being in the highest income bracket ?? pays 46.4% tax (for 2001) or $1,856.

Donor B ?? Makes a gift of appreciated, publicly traded securities
Donor B has the same stock valued at $10,000, also bought when it was only $2,000. However, instead of cashing in this stock and making a donation of the proceeds, Donor B makes a gift of the appreciated securities, by transferring the ownership certificate to the Foundation. With new tax laws (2006), the gain is not?taxable. Therefore, Donor B's tax savings are $1,856 larger than Donors A's.

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