Gifts of Securities

A gift of securities is one of the most cost-effective ways to support UBC, immediately or through a gift in your will. When publicly listed securities are donated to UBC, the tax on the capital gains is eliminated. Any publicly listed securities, including shares, bonds, warrants, stocks, mutual funds and segregated fund units qualify.

 

Giving securities is easy – and tax effective

  • UBC gift & estate planners work with you and your advisors to ensure a smooth transfer and a prompt donation receipt.
  • Making the gift is straight forward: As most securities are held electronically, your broker can usually execute a transfer in one or two days. Even mutual funds can transfer quite quickly.
  • You receive a charitable tax receipt equal to the mid-point of the trading value or the closing value of the securities, whichever is higher, on the date the securities are received in UBC’s account.
  • UBC will sell the securities and direct the proceeds to the cause you have specified.
  • You can deduct the entire gift in the current year or carry tax credits forward for up to five years.

 

How it works

chartLet’s look at the benefits of a $20,000 gift of publicly traded securities for a British Columbia resident.
We will assume:

  • The donor initially paid $10,000, but the stock is now worth $22,000, so their capital gain is $12,000 ($6,000 is taxable)
  • The donor’s marginal tax rate is in the mid-range at 32.5% (for the purposes of calculating the tax on the capital gain);
  • The donor has made gifts to other charities worth more than $200; and,
  • The donor has sufficient income to be able to deduct the entire gift in the current or following five years.

 

The donor will receive a charitable receipt in the amount of $22,000 (the value of the securities) and pay $9,614 less in tax ($22,000 x 43.7%) when filing their tax return.

The complete elimination of capital gains results in additional tax savings of $1,950 ($6,000 x 32.5%).

 

With the combined tax savings (donation tax credit and capital gains), the net cost of the donation is just $10,436 ($22,000 minus $9,614 tax credit minus the $1,950 capital gains tax savings) or 47.4% of the gift.