Cash vs Non-Cash Gifts

Perhaps you have a portfolio of mutual funds that is valued at $100,000. Or you may own a single stock of that value, or a collection of equities and bonds. You have decided to give this as a gift to charity.

Unless we make it our business to know the options, the government may stand to gain significantly from many estates in Canada, and those who have not planned will have little to say in how their resources are used .

In the example it is assumed that the original cost of the portfolio, regardless of its composition, is $25,000.

If it was sold first:

  • The donor would incur a capital gain that might result in a $16,725 tax bill.
  • The selected charity would receive the net $83,125.
  • The donor would receive a donation receipt of $83,125 for use towards a tax credit.

If the stock or bonds are donated direction:

  • The charity would likely liquidate it immediately and thereby receive a full $100,000.
  • The Canadian government allows the capital gain to be eliminated on such a transfer, a blessing to the donor
  • The donor receives a donation receipt for the full $100,000.

The decision to give the portfolio directly rather than to liquidate it and then give the cash give is a WIN / WIN for both the donor and the charities involved.