Page 23 - ECF-LIA-Mar-Apr-2024_20878_Web-Mag
P. 23

ecfoundation.org 23
ECF: Why should families ask their financial
advisors about donating securities?
CW: I would highly recommend that families discuss
charitable giving with their advisors. Advisors want to do
great work that improves their clients’ lives, as well as their
communities. Most financial advisors would be thrilled
to hear about the charities that are important to you. That
being said, advisors often specialize in different strategies
and niches. In case your advisor isn’t as comfortable
with this type of planning, I would also recommend
discussing charitable giving goals with your accountant.
There can be nuances to the tax treatments of donations,
such as alternative minimum tax (AMT). Ensuring your
accountant knows your plans and goals will help boost the
impact of your donations.
ECF: Why are these conversations important?
CW: Right now, charities in Canada need as much help as
they can get. Most data are indicating that Canadians are
reducing charitable donations, while the needs supported
by charities are continuing to increase. Utilizing the tax
code to maximize our donations is one way to get more
dollars into the hands of important charities.
ECF: What are the benefits of donating securities
instead of cash gifts?
CW: Currently, Canadians are allowed to donate qualified
securities that have gone up in value (otherwise known as
securities with an unrealized or “accrued” capital gain). This
is the key. If we sell that investment and pay tax on the gain,
we have fewer dollars to donate. However, if we donate the
investment to a registered charity, capital gain and all, we
can maximize our charitable dollars and our charitable tax
credits.
ECF: How does the process of donating securities
work?
CW: While it might sound intimidating, the process is
quite simple. I recommend donors reach out to their charity
of choice and/or their financial advisor to work through the
process, but the basics steps are:
→ Decide on the total value you want to donate.
→ Review your taxable investment accounts and decide
which securities you will donate. Typically, the security
with the largest gain in percentage terms makes the
most sense.
→ Fill out the appropriate paperwork. This is often a
Securities Donation Form from the charity, and a
Letter of Direction form authorizing your financial
advisor to initiate the transfer of securities.
→ The charity should take care of the rest. After the
charity receives the transfer, it will sell the securities
and send the donor a charitable tax receipt.
Purchase Amount (Book Value)
Investment Growth
Current Value (Market Value)
Total Capital Gain
Taxable Portion of Capital Gain (50%)
Tax on Sale of Shares (48%)
Donation Amount After Tax
$5,000
$5,000
$2,500
$1,200
$10,000
$5,000
$5,000
$2,500
$ 0
$10,000
$10,000
$8,800
100% 100%
Cash Donation
(Sell Then Donate) Securities Donation
$
$
Ensuring your accountant knows
your plans and goals will help boost
the impact of your donations.





















   21   22   23   24   25