Trans World Radio Canada - Gifts of Investments

Gifts of Investments

In general, when you sell investments that are not in an RRSP you pay income tax on the money you have made. That income is often in the form of capital gains with one half of the gain being taxable. If you give the securities to TWR, we then sell them and use the funds to support our ministry. Now NONE OF THE GAIN IS TAXABLE! It may benefit you greatly to make a gift of this type of asset instead of a cash gift.

It may be possible to arrange your non RRSP investments to have all the income accumulated and paid as capital gains. (This is called Capital Class.) There would be no taxation if given to TWR.

Example

Let’s assume you wish to make a gift of investments to Trans World Radio Canada worth $24,000. You initially invested $10,000. There is a gain of $14,000. Let’s compare the cost of the donation if you sell the investments and donate $24,000 in cash and then if you donate the investment directly. In both cases you will have a disposition of your shares for tax purposes at their fair market value of $24,000.

Tax on Capital Gain

 

Sell and then
Donate Cash

Donate to TWR

Proceeds of Disposition

 

$24,000

$24,000

Less Cost of Investment

 

($10,000)

($10,000)

Capital Gain
 

$14,000

$14,000

Taxable Portion of Gain 50%

 

$7,000

$0 

Tax @  32%*

$2,240

$0

 

* Approximate marginal tax rate. Most Canadians pay about 32 cents of tax on the last dollar they earn each year. The average tax they pay on all income will be less. Your tax savings will be larger if you earn above average income.

By giving your investments directly to TWR instead of selling them you will have saved $2,240 in tax on your capital gain. Generally, if you are going to make a donation and you are also selling securities, you should consider donating the securities to the charity instead. In either case you would receive a charitable receipt for your gift for $24,000 which will reduce the income tax you pay by approximately $9,100.

Every effort has been made to insure the accuracy of the above information. Please consult our office or your Advisor before taking action as regulations can change and may vary from province to province. (Last updated July 2016.)