Donating publicly traded securities or mutual funds is one of the most tax-smart and impactful ways to support charitable causes in Canada. By eliminating capital gains tax, you can maximize the value of your gift while receiving a larger charitable tax receipt.

How This Benefits You

When you donate publicly traded securities directly to a registered charity, the Canada Revenue Agency (CRA) does not apply capital gains tax on the increase in value of those investments.

Normally, if you sell appreciated securities first and then donate the cash proceeds, you may owe tax on the capital gain. This reduces the amount available for your charitable gift and may lower the value of your tax benefits.

By donating the securities themselves, you avoid paying capital gains tax on the appreciation. As a result, more of your investment goes directly to the SSVP, and you receive a charitable tax receipt for the full eligible value of the donated securities or mutual funds.

How Does It Work?

Imagine you purchased shares in XYZ Company for $50,000 and those shares have grown in value to $80,000. Your investment now includes a capital gain of $30,000.

If you sell the shares and donate the cash, capital gains tax may apply to the $30,000 gain. After paying the tax, you’ll have less money available to donate, resulting in a smaller charitable gift and tax receipt.

However, if you donate the shares directly, no capital gains tax is payable on the appreciation. This means the full value of the shares can support the SSVP, increasing the impact of your generosity while providing a tax receipt that reflects the larger contribution.

It’s a simple strategy that allows you to give more, support important work in your community, and make the most of your charitable giving.

The chart below illustrates the difference between donating securities directly and selling them before making a gift.

Your financial advisor will guide you to transfer shares to the SSVP using the form available here.