Children of Soldiers Fund

‘Tis the season of giving. If your money has been working hard for you, you may be considering donating some of your gains to charity. Not only does it feel good to donate to a worthy cause you believe in, but depending on your circumstances, it may save you some taxes. Below are some tax-effective ways to make charitable donations. Speak to your investment advisor to discuss if they apply to you.
Donate Securities. Instead of liquidating a security to make a cash donation, consider donating the security itself. If you donate mutual fund units, stocks or bonds, you won’t have to pay tax on any capital gain, and neither does the charity, and you get a tax receipt for the current fair market value. For example, if you wanted to donate $10,000 to charity, and you donate a stock as much that you bought for half that amount instead of the cash, you would save yourself from paying tax on the $5000 capital gain had you liquidated the position to make the donation, and you get a tax receipt for the full $10,000 donation. Donate your Life Insurance. You can donate an existing policy that is paid-up if your charity of choice is named owner and beneficiary. If you name a charity as the owner and beneficiary, the premiums that you continue to pay will be tax deductible. Another option is to open a new policy naming your charity of choice as the owner and beneficiary, and any premiums you pay will be tax deductible. Make a Bequest in Your Will. You can name charities as beneficiaries in your will, but it is important to get advice on what assets make the most sense to donate. Generally, that will be the assets that you own that have the greatest capital gains, such as flow through shares, and investments that have appreciated the most.

It is important to remember that how you give to charities can make your donations go further, which not only benefits the charity, but also you in the form of tax savings. Speak to your investment advisor before implementing any of these strategies, as tax laws vary from province to province, and state to state.

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