A donation of securities is a great way of offsetting other taxes on your estate. Normally, securities that increase in value are subject to capital gains tax when sold, but if they are donated ‘in kind’ to a charity then this tax is avoided.
The benefits of donating publicly-traded securities are:
- you will not pay tax on the realized gains
- they enable a larger gift to a charity, and therefore a larger charitable receipt
- they can offset other tax liabilities
- To qualify for favourable tax treatment, securities must:
- be publicly-traded shares listed on an approved exchange OR be units of a Mutual Fund or Segregated Fund from an insurance company
- have appreciated in value
- be donated in kind directly to the charity (not sold first by the donor)
