Tax Effective Method of Donating Stock


Tax Effective Method of Donating Stock

Paul Morton, CPA, CA, CFP, TEP, Tax Partner (retired)

If you are planning to make a significant donation to a Canadian registered charity in 2017, you might want to consider stocks. Donating stocks can be a tax efficient way to make a contribution, provided that you keep the following considerations in mind.

To qualify for special tax treatment, the investment must be a publicly traded security. The most common publicly traded securities are shares, debt obligations, and mutual funds that are listed on designated stock exchanges in Canada and internationally. Donations must be made to registered charities or other approved donees, the most common of which are public and private foundations.

The tax treatment can be illustrated using the following example.

You can either:

The tax consequences are shown in the table below.


In summary, by donating the shares, the donor saves $4,200 in tax, while the charity is ahead by $9,200 — a win for both parties!

Other tax considerations include the following.


Always speak with your accountant when planning how to meet your philanthropic goals. A slight adjustment can save significant taxes for you, and provide more funds to the charity you want to support.


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