Securities and Mutual Funds

A donation of securities or mutual fund shares is the most efficient way to give charitably.

Thank you for considering a gift of publically traded securities or mutual funds to support the work of the Trans-Himalayan Aid Society (TRAS). Before you go ahead, we suggest you read the following information on how to maximize your gift for the benefit of TRAS and yourself. A few years ago, the Federal government eliminated the capital gains tax on gifts of Publicly-Traded Securities and Mutual Funds.  Capital gains are the increase in value of your securities over the price paid at purchase.

If you sell your securities for cash, you’re responsible for the tax due on the gain, even if you plan to donate the proceeds from the sale. If you pay the tax out of those proceeds, there’s less money left to donate. Your charity receives a smaller donation and you have a smaller donation to claim for your charitable tax credit at the end of the year.

If you donate your securities directly to TRAS, those capital gains aren’t subject to tax. This means TRAS receives a larger gift, and you’ll benefit from a tax receipt for the full value of your eligible securities or mutual funds.

Here’s an example of how it works.

Let’s say you purchase common shares in ABC Company for the cost of $1,000. If the current market value of those shares has increased to $5,000, you would have a capital gain of $4,000.

If you sell those shares and donate the proceeds, you’ll owe tax on the capital gain. So, you set aside the taxes due from the proceeds, leaving you with less than the full cash value to donate and a tax receipt which reflects the smaller donation.

But if you donate the shares directly, you would owe no capital gains tax and you would be able to donate the full value. So TRAS would get a larger donation and you would get a tax receipt which reflects your larger contribution.

  Sell securities and donate the after-tax proceeds Donate securities through TRAS
Original cost of Securities $1,000.00 $1,000.00
Current Market Value $5,000.00 $5,000.00
Capital Gain $4,000.00 $4,000.00
Estimated Tax on Capital Gains    $920.00       $0.00
Donation amount after-tax $4,080.00 $5,000.00
Your charitable tax credit $1,876.80 $2,300.00

By donating shares directly, you would save on taxes while you would be offering more help to the health and education of the children supported by TRAS.

The value of your donation is based on the closing price of the security on the day the securities are received.

 Instructions:

  1. Inform the TRAS office 604-224-5133 or by email to info@tras.ca that you would like to transfer shares and whether you would like to designate the gift to a specific project or as a general donation. We will be happy to answer any questions you may have.
  2. TRAS will send you a ‘Letter of Direction for Transfer of Marketable Securities’ to be completed and for you to forward to your brokerage firm.

THANK YOU FOR YOUR SUPPORT 

The information contained is general in nature and is not a substitute for independent legal advice. We recommend you seek independent counsel before making a planned gift.

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