A gift-in-kind is a gift of property such as real estate, securities, artwork, jewelry or collectibles. After an independent appraisal of the property, the Canadian Anesthesia Research Foundation will issue you a tax receipt. In some cases, you might receive benefits and continue to use the gift during your lifetime.
Jake Giver would like to make a donation of stock to CARF. He owns 1,000 shares of XYZ Company which is traded on the Toronto Stock Exchange. When Jake acquired the shares, they had a value of $20 per share; they now currently trade at $50 per share. Jake must ensure that he makes a “Gift in Kind” to CARF and not sell the shares and donate the cash he receives from the sale of the shares.
If Jake were to sell the shares and gift them to CARF, it would result in the following:
Number of Shares - 1,000
Adjusted Cost Base - $20 per share = $20,000
Value of Shares $50
Fair Market Value - $50,000
Capital Gain - $30,000
50% Inclusion of Income - $15,000
Marginal Tax Rate - 46.41%
Tax Owing - ($6,961.50)
Donation Receipt - $50,000
Tax Savings from Donation - $23,205.00
Net Tax Savings - $16,243.50
By donating the shares “in kind” Jake reports 0% of the gain which results in no tax payable. The result of donating the shares "in-kind" are as follows:
Number of Shares - 1,000
Adjusted Cost Base - $20 per share = $20,000
Value of Shares $50
Fair Market Value - $50,000
Capital Gain - $30,000
0% Inclusion of Income - $0
Marginal Tax Rate - 46.41%
Donation Receipt - Gift-in-Kind - $50,000
Tax Savings from Donation - $23,205
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