Gifts of Securities

Give a Gift of Appreciated Property and Publicly-listed Securities

One of the most financially sound ways to support Cottage Farm is with the gift of securities (stocks, bonds, mutual funds).

Thanks to changes in Canadian tax laws in May of 2006, when you donate stocks, mutual funds and other securities to a registered charity, you pay no capital gains tax and receive a tax receipt for the full amount of the gift. It means a great tax break for you and helps to build much needed treatment for people suffering from mental illness.

Tax Advantages

Usually when you sell a security, you’re required to pay tax on 50 percent of the capital gain. But when you transfer that same security directly to a charity like Cottage Farm, there’s no tax on the capital gain realized. This is a tremendous incentive to give securities as a gift now to ease your own tax burden, or as a deferred gift in your will to offset the tax against your estate.

How to Donate Securities

Depending on whether you hold your securities with a broker or as physical documents (i.e. stock certificates), you may donate them electronically or by physical delivery. For electronic transfer, please contact your broker and fill out a Direction to Transfer Funds Electronically form.

If you hold shares in certificate form, you may fill out the Letter of Authorization form and either hand deliver, courier, or send them by registered mail to Cottage Farm’s office at:

Cottage Farm Centre for Mental Health Recovery PO Box 91202 West Vancouver, BC V7V 3N6.

  • As a donor you will receive great tax benefits and receive an immediate donation receipt.
  • Securities are easily handled and can be transferred physically via delivery or electronically.

How you Benefit

Impact of the Federal Budget Provision to Eliminate Capital Gains Tax on Publicly Traded Stock and Securities

As illustrated by this table, you increase your current after-tax cash flow (marginal tax rate at 46% for illustration):

Sell shares and gift cash
to charity		 Gift shares directly to charity
Current market value of stock and amount of tax receipt $100,000 $100,000
Cost base $20,000 $20,000
Capital gain realized
($100,000 – $20,000)		 $80,000 $80,000
Taxable capital gain
(50% of $80,000)		 $40,000 $0
Tax due on gain
(46% of $40,000)		 $18,400 $0
Donation tax credit
(46% of $100,000)		 $46,000 $46,000
Net tax savings from donation
(tax credit minus tax due)		 $27,600 $46,000

Securities Donation Policy

The donation must be an in-kind transfer of the security itself, not the cash proceeds from the sale of the security. Such a transfer is easily made electronically from your investment account. Cottage Farm will issue a tax receipt for the closing value in Canadian dollars on the date the shares are received into its brokerage account. If the shares are hand-delivered or mailed, a properly executed power of attorney is required and Cottage Farm will issue a receipt for the closing value in Canadian dollars on the date the shares are received and accepted. Cottage Farm will sell shares on the same date they are received, or as close to it as possible.