Sell securities and donate cash |
Donate securities directly |
|
Value of donation (A) |
$5,000 |
$5,000 |
Adjusted cost base (B) |
$1,000 |
$1,000 |
Capital gain (C=A-B) |
$4,000 |
$4,000 |
Capital gain inclusion rate (D) * |
50%* |
0% |
Taxable capital gain (E = C x D) |
$2,000 |
$0 |
Tax payable (40.7% marginal rate assumed) |
($814) |
$0 |
Donation tax credit |
$2,239 |
$2,239 |
Net tax savings (F) |
$1,425 |
$2,239 |
Net after-tax cost of donation (A-F) |
$3,575 |
$2,761 |
*Effective on June 25, 2024, the federal government proposed to increase capital gain inclusion rate to 2/3 (from 1/2) for the amount of capital gains (realized by individuals) that are more than $250,000 a year. So, the advantage of donating investment securities directly may be more significant than shown above.
