What kind of tax savings do I get when I donate to my favorite charitable cause?
The first $200 you donate generates a tax credit of 16% , but every dollar after that generates a tax credit of 29%. And that's just the Federal tax savings, you also reduce your Provincial income taxes. It does not matter what tax bracket you are , the tax savings in a low tax year , match those in a high tax year.
An individual making a donation will receive a federal tax credit of 16% on the first $200 donated and 29% on any additional amounts. An individual can claim up to 75% of their net income while alive and 100% in the year of death. After the federal numbers are calculated and the provincial taxes are taken into account, an individual at the top income level can expect realistic tax savings of between 39% and 48% (varies by province) for every dollar donated above $200.
What's the big deal with donating shares , why don't I just write a cheque? Won't the charity receive the same amount of money?
Yes they will receive the same gift either way. The difference is in your after tax cost. You get one tax credit for donating cash , but can add another tax benefit by donating shares with a capital gain . If you donate shares you do not have to claim the capital gain , ever.
Can you show me an example?
If you sold $10,000 of stock with a $2000 cost base , then you would normally report an $8000 capital gain . The tax on the gain would be around $1,700 ( for a high tax bracket in BC ) . But when you donate those share , you do not need to claim the gain , nor pay the tax on the gain. You end up with a charitable tax receipt for the whole $10,000 , which saves about $4,325 in a combination of Federal and BC income taxes. Now add in the $1,700 you saved from claiming the capital gain , and your net after tax cost of your gift is around $4,000 . Check out the calculator page
Does this apply for any capital gain? Will it work for Canadian as well as US stocks?
It applies to any capital gain , and it's not just stocks. You can also donate bonds or mutual funds .Some donor's triple up their tax write off's by donating Flow Through shares as well . You can even donate land or real estate .
Do I have to deliver a share certificate?
Thanks to the age of computers , all that is required is a transfer of the security position from your Investment Account to your Charity's Investment account. This can be accomplished with just a signature on a standard Transfer Form. You can use our form , or ask your broker to initiate the transfer.
Can I split up my gift between several causes our family supporters?
Yes , and that's one of the main reasons philanthropists use the Community Foundation of the North Okanagan, it lets them meet their gifting objectives with ease of administration
I still have a few questions, who should I call?
Start with David Fletcher at the Community Foundation's Office. He has access to plenty of locals resources , and will be able to answer your questions, or steer you to a professional who can . You can reach David Fletcher at 542-8677 .