If you are looking for a way to reduce your tax bill and make a meaningful donation to Knox Presbyterian Church consider a special gifting opportunity that is available to Canadians.
The Government of Canada encourages the donation of investments/stocks by potentially eliminating the taxes you must pay on such donations. Under normal circumstances, when you sell a publicly traded security, you are subject to income tax on 50% of the increase in value or capital gains. However, when you donate appreciated investment to a registered charity such as Knox (by using the “Gift of Publicly Traded Securities” form), you don’t have to pay tax on any of the gain – the inclusion rate in income is 0%.
You donate publicly-listed shares to Knox Presbyterian Church. Your cost of the shares was $1,000 and their Fair Market Value is now $10,000 and you have income for tax purposes greater that approximately $130,000. Your Federal donation credit will be 29% of $10,000 or $2,900. At the Ontario Provincial donation rate of 17.4% (11.16% plus surtaxes) your Ontario provincial credit will be $1,740 for total tax credits of $4,640.
If you sold the stock you would have capital gains of $9,000 ($10,000 proceeds – $1,000 cost) and, half of that, or $4,500 would be included in your taxable income & you would have taxes payable at 46.4% (29% + 17.4%) of $2,088. However since the taxable capital gain is deemed to be nil, there is so taxes so you effectively save another $2,088 in taxes.
Your cost to make a $10,000 donation to Knox Presbyterian Church is effectively: $10,000 minus ($4,640 credits + $2,088 tax savings that would have applied if you and sold the shares) = $3,272.
Please note that to have your donation of stock included on your 2012 income taxes, the donation must be made by December 26, 2012. To be safe your broker should be instructed to transfer any stock to Knox’s broker by Friday December 21, 2012.
If this is something that may be of interest to you, please speak to either Rev. Brooke Ashfield or John Scace to obtain further details and a copy of our Knox Stock Donation Form to give to your stock broker to assist the transfer. The Stock Donation form can also be found here on our website (Word or PDF).