By transferring stock to the Ontario Farmland Trust (OFT) you are helping to protect essential farmland in Ontario, while receiving tax benefits for yourself.
Donating stock, and in particular long-held shares with accumulated capital gains, is one of the most cost-effective ways you can help to permanently protect agricultural land for farming in Ontario.
Investments that have greatly appreciated in value can mean a high capital gains tax. Under normal circumstances, when you sell a publicly traded security, you are subject to income tax on 50% of the increase in value or capital gain. However, when you donate an appreciated investment to a registered charity, you don’t have to pay tax on any of the gain – the inclusion rate in income is 0%.
You save the tax and you will receive a charitable tax receipt for the fair market value of the shares in exchange.
The following example shows that the same $10,000 donation yields an extra $1,500 in tax benefit to you, when you support OFT with a gift of securities.
|Sell Shares / Donate Cash||Donate Shares to Charity|
|Current value of securities||$10, 000||$10,000|
|Amount paid for securities||($4,000)||($4,000)|
|Capital gain realized||$6,000||$6,000|
|Taxable portion of gain @ 50% inclusion||$3,000||N/A|
|Tax on capital gain at 50%*||($1,500)||$0|
|Tax benefit of gift at 50%*||$5,000||$5,000|
|Net cost of gift||$6,500||$5,000|
*50% assumed rate. Actual tax rates of combined federal and provincial will differ by province. The above information is general in purpose. You should always seek professional financial advice before making any decision
For more information, contact us at 519-824-4120 ext. 52654.