Saskatoon Directory in our Trusted Saskatoon Financial Services category.
tip on donating shares through a business = tax savings for BOTH you and the corporation:
You’ve worked hard to grow your business over the years and now it’s time to share the wealth with your favourite charity. Giving back through a personalized charitable giving strategy speaks volumes about who you are and the values you hold dear.
Careful planning today, utilizing the Canadian income tax incentives available can ensure that you maximize your philanthropic goals . And, your Canadian business can also be a valuable tool in the strategy.
As an individual your lasting legacy can be achieved, not only with gifts of cash, but also through gifts of certain capital property, registered plans such as RRSPs, RRIFs, and life insurance, either during your lifetime or through a bequest at death. If you are a business owner, funds and investments within the corporation can be used to augment your personal charitable giving goals, while achieving tax efficiencies within the corporation at the same time.
How do corporate donations work?
Generally, the rules for charitable donations are the same for individuals and corporations in Canada. Up to 75% of net income can be donated within the tax year. Excess donations can be carried forward for up to 5 years.
The main difference between individual and corporate donations is the tax treatment in the year of donation. An individual donor will receive a non-refundable tax credit on their tax return which will reduce their tax payable. A Canadian corporation will claim the donation as tax deduction that will reduce taxable income in the year.
Gifts of certain capital property, such as publicly traded securities can be donated with additional tax savings: If you sell investments that have appreciated in value, you will normally realize a capital gain and 50% of the gain would be subject to tax. However, Canadians who donate certain capital property to their favourite charity pay no capital gains tax and receive a tax credit for the fair market value of the donated property. This rule applies to both individual and corporate donations.
But the corporation has an added benefit when gifting appreciated securities through the Capital Dividend Account (CDA). The CDA is a notional account that is used to keep track of the non-taxable portion (50%) of the capital gains earned by the corporation. Shareholders can withdraw amounts in the CDA on a tax free basis.