Capital Gains Help Build Better Bridges. Tax-free.
Innovative provisions to taxation have been made that encourage
greater philanthropic activity in Canada. Specifically, donors who donate
certain publicly traded securities “in kind” to registered public
charities, including London Health Sciences Foundation, are now exempt from the
payment of capital gains tax on any profit created by the fair market value of
the donation. Qualifying securities include stocks, bonds, trust units,
exchange-traded funds, segregated funds and mutual funds units to name a few,
as well as shares acquired on exercise of employee stock options, although the
process for tax reporting is different on the latter.
Under the old rules, tax was payable on 25 percent of the capital
gains realized on the fair market value of the donated securities shares. Due
to changes in the 2006 Federal Budget, there is now no tax payable on
any of the capital gains realized.
In order to qualify, three criteria must be met:
The donation must be made “in kind” (or in their current form,
unsold),
The charity must be a Canadian publicly registered charity (private foundations
do not qualify at this time), and
The shares must be publicly traded on Canadian or other major
internationalexchanges (private company holdings do not qualify at this time).
