Tax-Wise Charitable Giving

Canadians are generous. Over 80% of us donate to charity every year, and we rank third in the world when charitable giving is expressed as a percentage of GDP.

“Generosity is alive and well in Canada and we are very grateful for every single donation from the thousands of people who are supporting our national treasure – The Great Trail,” says Simone Hicken, vice-president, resource development at Trans Canada Trail.  “Every day we hear from Canadians who want to preserve and protect this unique natural gift.”

The bulk of charitable donations are made by those aged 50 and older, with 30% of total donations coming from people over 70. Many people at this stage of life have accumulated assets – mortgages may be paid off, children may be out of the house and retirement plans are in motion.

Numerous surveys indicate that people give to charities with which they have a strong personal connection. But, if you are going to give, it makes good cents (pun intended!) to take advantage of Canada’s generous charitable giving tax incentives.

There are a number of tax-wise options to consider when working on your charitable giving plan with your tax advisors.

Leaving a gift in your will is the most popular way that Canadians support their favourite charities in their estate plans. This donation is made in your last will and testament and can consist of cash, stock and property. Your estate will receive a charitable tax receipt for the full value of your donation, which reduces the amount of tax payable. Your estate can claim gifts equal to 100% of net income in the year of passing and in the preceding year. With recent tax changes, your estate may now also claim tax credits in subsequent years.

Donating appreciated publicly traded securities during your lifetime or through your estate is also beneficial. When you donate publicly traded securities, you or your estate receives a tax receipt for the appreciated value of the securities and the 50% tax on the capital gain is eliminated.  Any publicly listed securities, including shares, bonds, warrants, stocks and mutual funds, qualify.

Donate your Registered Accounts (TFSA, RRSP, RRIF) Many do not realize that, upon passing, the total value of your registered retirement accounts must be reported as income. This income is fully taxable, unless the funds can be rolled over to a surviving spouse or dependent child. Making this kind of gift is easy – simply complete the beneficiary designation form given by your plan’s provider and list the charities you want to designate as beneficiaries. The donation from your Registered Accounts will avoid probate fees and will offset taxes owed on your final tax return.

Trans Canada Trail is a not-for-profit organization. If you value our work, please consider supporting us by visiting our Give page.