We are coming to the end of another year, and now is the time to make use of any last-minute tax planning tools to minimize current taxes. A gift of publicly-traded securities is a very effective way to give to charity. The tax treatment to the individual is favorable, and the charity can decide whether to hold or sell the security.

When you dispose of securities, you must pay tax on 50% of the capital gain (fair market value at the time of transfer, less adjusted cost base, which is usually your original cost).  Effective May 1, 2006, when you donate publicly-traded securities, the capital gain, that would otherwise be taxable, is not included in income.  This means that there is no tax to the individual on the transfer to the charity and the individual receives a donation tax receipt for the full value of the security at the time of transfer, which can be claimed on the individual’s personal tax return.

(Chartered accountants based in Mississauga and Etobicoke)