|
How to use your investments to make the world a better place
Integrating philanthropy and financial solutions
Do you make a donation to various charities, hospitals or even to your children’s schools? With this article, I would like to demonstrate how you can benefit from tax shelters while integrating your core values in the global management of your investments.
The charitable gift
The canadian and provincial tax legislation encourage this philanthropy in 2 ways:
- By a tax credit applicable to the entire amount of the donation to a recognized charitable organization or a philanthropic foundation;
- By an exemption of the tax on capital gains for the gifts made to these same institutions in the form of securities. As an example, let us consider the shares of a company that are listed on the stock market and mutual funds;
- Other dispositions make it so that the net cost of the donation for the giver can prove to be much lower than the amount of the charitable donation.
If you own shares that have accrued in value since their acquisition, you are able to transfer these positions directly to a charitable organization rather than selling them to make a donation. If you chose to sell your shares, you would have to pay taxes on half of the capital gain.
A STOCK DONATION:
CLEARLY MORE ADVANTAGEOUS
EXEMPLE :
MICHAEL WISHES TO DONATE 100,000$ OF HIS INVESTMENTS TO A CHARITABLE ORGANISATION. |
He sells his shares for a value of 100,000$ and will make a donation with the cash proceeds ** |
He transfers a value of 100,000$ in shares |
| A. VALUE OF THE ASSETS AVAILABLE FOR THE DONATION |
100 000 $ |
100 000 $ |
| B. ADJUSTED COST BASE OF THE SHARES |
40 000 $ |
40 000 $ |
| C. CAPITAL GAINS (A - B) |
60 000 $ |
60 000 $ |
| D. TAXABLE CAPITAL GAINS (50% DE C) |
30 000 $ |
N/A |
| E. TAX PAYABLE AS A RESULT OF THE SALE (0,45 X D) |
13 500 $ |
N/A |
| F. AMOUNT AVAILABLE FOR THE CHARITABLE DONATION (A-E) |
86 500 $ |
100 000 $ |
| G. TAX CREDIT FOR THE CHARITABLE DONATION(0.45 x F) |
38 925 $ |
45 000 $ |
*Assuming an income tax rate of 45%
** The donation is the balance left once the tax on capital gain was paid.upposant un taux d’imposition marginal de 45%
You now are aware of a new strategy allowing you to maximize the value of your donations while reducing your taxes. This particular traitement opens the door to multiple scenarios, particularly in your global financial strategy.
Contact me and it will be my pleasure to give you more information on this matter.
Best regards,
|
I have created a series of questions that will allow you to identify any changes that need to be made in order to attain your financial objectives.
Technologies HPJ Solutions