Q. Is it more advantageous to sell shares and use the funds to make a donation or donate the shares directly to charity? How much capital gains tax will I pay?
A. Sell shares and donate the money: You will receive a 15 per cent tax credit on the first $200 and 29 per cent on the amounts above that. The sale of shares will be subject to tax on 50 per cent of the capital gain.
Donate shares directly to charity: The 2006 federal budget eliminated the income-inclusion rate for donations of listed publicly traded shares and therefore your capital gains and tax is nil. Additionally, you can also claim the tax credit. This is a triple benefit. You pay no tax on the appreciated value of your shares, get a tax credit and give to a good cause.
– Henry Choo Chong, CGA, can be reached at firstname.lastname@example.org.