Why should I donate publicly traded securities?

 

If you own publicly traded securities that have increased in value since you purchased them, using them to make your charitable donations is the most tax effective way to give. If you sell the securities you will pay tax on 50% of the capital gain. If you donate the securities in-kind, you will pay no tax on the capital gain, and you will receive a charitable receipt for the market value of the securities on the day you initiate the transfer.

 

 

What is a publicly traded security?

 

A publicly traded security is a stock or bond that trades on a stock exchange recognized by Canada Revenue Agency (CRA). Mutual funds do not trade on stock exchanges but are also considered publicly traded securities.

 

 

Which stock exchanges are recognized by CRA?

 

In Canada, this would be the TSX & TSX Venture exchanges. In the U.S., the New York stock exchange, the AMEX, as well as the NASDAQ, are recognized by CRA. Many foreign country exchanges also qualify. If you have a security that is trading on an exchange outside of North America, we will be able to find out if it qualifies.

 

 

What does in-kind mean?

 

This means that you do not sell the security and transfer cash to Oasis, but rather your securities are transferred to a brokerage account representing Oasis and then sold. If you sell them first you will pay tax on 50% of the capital gain.

 

 

Which securities should I donate for maximum tax savings?

 

You can only donate securities that are held in a non-registered investment account. Investments held in a registered account (RRSP or RRIF) do not qualify for these tax savings.

 

Capital gains on investments held in a tax free savings account are already tax exempt, so donating these investments will not generate the same tax savings as donating securities held in a taxable investment account.

 

Always donate the stocks, bonds or mutual funds with the greatest capital gain because this will save you the most tax.

 

 

 

Why wouldn’t I donate the securities directly to the charities I want to benefit?

 

Many charities don’t have brokerage accounts or the expertise to process in-kind donations.

 

Oasis works with Abundance Canada to process the donation of securities, sell them and disburse the proceeds to our church. You can disburse the proceeds immediately or over a period of years. This works well if you want to receive the tax benefit in one year but fulfill a longer-term pledge to Oasis.

 

 

Who issues the receipt?

 

Abundance Canada is a registered Canadian charitable foundation and will issue the donation receipt and send Oasis the proceeds from the sale of the securities.

 

 

How will Oasis know that the donation came from me? I don’t want them to think that I no longer support them.

 

Abundance Canada will send a letter along with the cheque to Oasis informing us that the donation came from you. We will mark it to your account as received but will not issue a donation receipt (because you will already have received one from Abundance Canada).

 

 

What is the process for donating securities?

 

Contact Abundance Canada and let them know that you would like to donate securities to Oasis Church. They will then direct you to fill out a third-party transfer form or charitable donation form from your financial institution. If your financial institution does not have these forms, Abundance Canada will provide a letter. If you hold a physical certificate (shares or bonds) or your investments are held in a Dividend Reinvestment account (DRIP), there are extra steps required to complete the donation. In these situations, contact an Abundance Canada consultant for further information.

 

 

Can you send this transfer form directly to my broker?

 

Yes, if your broker is familiar with the transfer process, Abundance Canada can email a copy of the letter to them and they can assist you in completing it.

 

It is essential that a completed copy of this letter is emailed or faxed to Abundance Canada so that they know a transfer has been initiated and can track it. They also require the information from the letter to issue the donation receipt.

 

 

How is the donation receipt value calculated?

 

Abundance Canada issues a receipt for the value of the securities on the day you initiate the transfer. The value is determined by the closing price, or the average of the high and low trading price, whichever calculation yields the higher receipt value. For mutual funds, which are priced once a day, the daily closing price is used, provided we receive the instructions prior to market close.

 

 

What if I don’t need the whole value of my charitable receipt to reduce my taxes payable to zero?

 

You can carry forward unused charitable deductions for up to five years after the year the donation was made.

 

 

What happens once the securities are donated?

 

When the securities have been transferred to Abundance Canada’s brokerage account for Oasis, they will place an order to sell them. They will send you the donation receipt and an account statement showing the amount available for distribution to Oasis. If you want some funds to be disbursed later, they will be held in a gifting account for future distributions to Oasis.

 

 

Why is the amount shown on my statement different than what I was receipted for?

 

You are receipted for the value of the securities on the day you initiated the transfer. It can take a few days to several weeks from the time you initiate the transfer until the securities arrive in Abundance Canada’s brokerage account. Because the market price of the securities fluctuates, the value can increase or decrease over the time it takes to complete the transfer. The amount shown on your statement is the net proceeds from sale after Abundance Canada’s donation fee has been deducted. Your donation receipt will show the value of the securities on the day you initiated the transfer. The difference between the two numbers is due to the market value changes during the transfer period, as well as the donation fee to Abundance Canada. The statement indicates the amount available to disburse to Oasis Church.

 

 

If I don’t distribute the entire proceeds immediately, will Abundance Canada pay interest on the balance in my gifting account?

 

In most cases, yes. Contact an Abundance Canada consultant to discuss these options.

 

 

What if I don’t want to send the donated capital to charity, only the earnings from the donation?

 

In this situation, Abundance Canada would request that you indicate this preference in writing. They would then place a restriction on the fund to distribute earnings only, unless advised otherwise by you. If you want to know more about restricting the distribution of donated capital, please contact an Abundance Canada consultant.

 

 

Is there a minimum amount you will send to a charity?

 

Yes, the minimum donation amount is $100. 

 

 

How is Abundance Canada compensated for their work in this transaction?

 

A portion of the sales proceeds is considered a donation to Abundance Canada to support their work helping charities. They use the following scale to determine the amount of the donation.