Gifts of Securities
What are gifts of securities?
People who own stocks, bonds or mutual funds are pleased to learn that their investments have increased. Unfortunately, when such an investment is converted to cash the realized capital gain is taxable. You can decrease the financial impact this will have by donating your publicly listed security directly to a charitable organization. In May 2006, the Federal government eliminated the capital gains tax on gifts of securities to registered charitable organizations.
Consider the following example:
Making a gift of $10,000 in stock: Mr. M.S. Donor purchased ABC Company stock some years ago for $2,000. The current Fair Market Value (FMV) is $10,000 (adjusted cost base, ACB). When looking at his stock portfolio, he is considering giving his ABC Company stocks to the MS Society as a legacy gift. His combined federal and provincial tax rate and charitable tax credit are both 45%. Here is an example of the real cost of giving the stock instead of selling it.
| Amount of gift | $10,000 |
| Total gain (FMV-ACB) ($10,000-$2,000) | $8,000 |
| Taxable gain (50% x $8,000) | $4,000 |
| Tax on gain (45% x $4,000) | $1,800 |
| Tax credit (45% x $10,000) | $4,500 |
| Net credit (tax credit – tax on gain) | $2,700 |
| Amount of gift | $10,000 |
| Total gain (FMV-ACB) ($10,000-$2,000) | $8,000 |
| Taxable gain (0% x $8,000) | $0 |
| Tax on gain (0% x $4,000) | $0 |
| Tax credit (45% x $10,000) | $4,500 |
| Net credit (tax credit – tax on gain) | $4,500 |
| Net advantage of donating stock “in kind” ($4,500-$2,700) |
$1,800 |
How may I create my legacy?
Creating your legacy gift is as easy as 1, 2, 3!
- Download the Securities Transfer Form
- Fill out the form and fax it to your broker and the MS Society
- Confirm details of the donation with your broker and await the MS Society’s call to thank you for your generosity
If you have already created a legacy gift and you wish to let us know about your gift, please take a moment to fill out our Statement of Intent form. Any information you provide will remain strictly confidential.
