Gift of Listed Securities

A Detailed Explanation

In the May 2006 Federal Budget an exemption was granted from capital gains taxes that arise from the difference between the appreciated value of listed securities (including shares of publicly traded companies, mutual funds, bonds, etc.) and their cost if they are donated directly to a charitable organization or public foundation. If securities appreciate in value and are sold at some point in the future (for example, as part of an estate) capital gains tax must be paid on 50% of the gain. A donation of these shares to a registered charity eliminates the need to pay capital gains taxes and in addition an income tax receipt will be issued for the value of the securities at time the donation was made.

One of the advantages of donating shares, mutual funds, etc. to a registered charity is that there is no direct outlay of cash. Quite often, listed securities may have been tied up for years in a brokerage’s account or as a stock certificate kept in a secure place. The value of a donation can be significant given the increase in the stock market in recent years, and through this method a donor can make a positive impact to a charity without utilizing their liquid cash resources.

The following example is for illustration purposes only and is based upon a publicly traded security being donated to an Archdiocesan charity. The capital gains tax rate and tax credit benefit vary according to a person’s taxable income as well as their province of residence. A tax rate of 45% has been assumed for this example.

To make a donation of listed securities to The Shepherds' Trust, you first must have the ownership of the listed security transferred by your broker to the Archdiocese by means of a Letter of Direction. There is no cost to you, as the Archdiocese, through their broker, will pay the applicable fees. The Archdiocese will then sell the listed security and transfer the proceeds to The Shepherds' Trust, and issue an income tax receipt for the value of the shares on the date that the donation was transferred to the Archdiocese.

If your wish to donate listed securities to The Shepherds' Trust, you can obtain the Letter of Direction from your Parish office.  You may also download a PDF copy of each of the forms below:

For more information on planned gifts to The Shepherds' Trust, please contact
Mr. William Dunlop, Secretary/Treasurer at (416) 934-3400, ext. 614.