One form of a "gift in kind" is a security that is listed on a recognized stock exchange. If donors make gifts of listed securities such as common shares, they receive a special tax benefit. That happens when the listed security has appreciated in value since they acquired it. Since May 2, 2006, when donors make a gift of shares they do not need to include any of the capital gain that they normally would have to declare as taxable income had they sold the shares and given the cash proceeds instead.
For example, let’s assume that a donor wants to make a gift of 100 shares that originally cost $5,000. The shares trade at $80 at the time of the gift. If the donor would sell the shares and make a gift of the cash proceeds to a charity, the net cost of the gift would be $675 greater than if the donor made a gift of the shares instead (assuming a 45% combined federal and provincial rate). To illustrate the result, please see the following comparison:
|Sell the shares and donate the cash||$8,000|
|Gift of shares instead||$8,000|
|Less donor's original cost||-5,000||-5,000|
|Capital gain rate||50%||0%|
|Reportable capital gain for tax purposes||1,500||0|
|Assumed tax rate||45%||45%|
|Tax on reportable capital gain||675||0|
|Net cost of gift to donor:|
|plus Tax on capital gain||675||0|
|minus Tax Credit (8,000 x 45%)||-3,600||-3,600|
|Net cost of donor's $8,000 gift||$2,075||$1,400|
Have questions? Find the answers in our FAQ's.
If you are ready to give a gift of securities to Salaam Ministries now, please use the following forms:
If you are transferring your securities electronically:
- Authorization to Transfer Publicly Traded Securities to Salaam Ministries (for your broker – Electronic Securities Transfer) and
- Designation Instructions (Electronic Securities Transfer)
If you have any questions or need help with the forms, please contact us.