| Sell shares and donate the gross proceeds |
Donate shares directly |
|
|---|---|---|
| Market value of security | $10,000 | $10,000 |
| Cost base | $5,000 | $5,000 |
| Capital gains |
$5,000 ($10,000 current value - $5,000 purchase price) |
$5,000 ($10,000 current value - $5,000 purchase price) |
| Tax on capital gains |
$1,338 ($5,000 capitals gains x 50% taxable gains x 53.5%*) |
$0 |
| Tax credit |
$5,040 ($10,000 gift x 50.4%*) |
$5,040 ($10,000 gift x 50.4%) |
| Net cost of gift |
$6,298 ($10,000 gift + $1,338 capital gains - $5,040 tax credit) |
$4,960 ($10,000 gift - $5,040 tax credit) |
| Total tax savings from donation | $5,040 | $6,378 |
*Example uses assumes donation made in Ontario using top marginal tax rate 53.5% & top donation credit rate of 50.4%
**Note: New Alternative Minimum Tax (AMT) rules may result in some adjustments to these calculations.