Revenue Canada has established a procedure for the donation of securities and mutual funds to registered charities that allows the donor to benefit from not having to declare any capital gains.
The stocks are transferred from your broker or financial advisor to Tepner Appt Group (CIBC Wood Gundy). The value of the transfer that appears on your tax receipt is applied at the end of the trading day on which they are received by our broker. The proceeds can then be used to pay membership contributions, make a General Fund donation or can be directed to any other existing synagogue fund, such as the Capital Reserve, the Rabbi’s Discretionary Fund, the Social Justice Advocacy Fund or the Youth Education Fund.
This way of donating often benefits the donor to an extent not realized by making a simple cash donation, especially if the stocks being donated have appreciated significantly and would generate a large capital gain tax bill. Talk to your financial advisor if this is a useful tax reduction option for you.
When you donate this way, the amount is entered into our records to be added to your annual tax receipt that is sent out in the first quarter of each year.
As an approximate example of the potential savings, consider this scenario:
| Sell securities & donate after-tax proceeds | Donate the securities themselves through Darchei Noam | |
|---|---|---|
| Purchase price of securities | $1,000 | $1,000 |
| Current market value | $5,000 | $5,000 |
| Capital Gain | $4,000 | $4,000 |
| Capital Gains Tax (marginal rate 46% applied to 50% of the capital gain*) | $920 | $0 |
| After Tax Donation Amount | $4,080 | $5,000 |
| Charitable Giving Tax Credit | $1,876.80 | $2,300 |
*This assumes that you haven’t passed the threshold requiring tax to be paid on 75% of the capital gain that is over that threshold. If you have, the benefit will be even higher
To initiate the process, complete the form and use it to have your broker transfer the shares to Tepner Appt Group. Send a copy to Tepner Appt to alert them to the imminent arrival of the shares so that they can ensure that you received the donation credit for the share value at closing on the day of receipt into their office. You will receive a letter from Darchei Noam acknowledging your donation.
Please note that the amount deemed to have been donated is the value of the shares at the close of trading on the day they were received by the Darchei Noam broker. This can differ (up or down) from the time you request the transfer. This could result in a lower amount than expected and might not cover the intended purpose (e.g., your membership contribution). If that is the case, you are still responsible for the balance owed. If the amount is higher than you expected, we cannot return any excess, since under tax law, we have to report the value at closing as the “donation amount”. Any surplus will therefore be placed in the General Fund, with our appreciation.
Darchei Noam covers any of our broker’s fees charged for the transaction.
