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Gifts in Kind and Securities

Gifts In Kind

IIn addition to cash donations, the Greater Saskatoon Catholic Schools Foundation Inc. is able to accept real property. These types of donations are called Gifts in Kind. Gifts could include stocks, bonds, artwork, sculptures, houses, cabins, land, cultural property, books, collections, and other assets. The donor will receive a receipt for the fair market value of the gift.

The donation of a Gift in Kind is deemed, for tax purposes, to be a disposition. Therefore, it is necessary for the donor to consult with a financial advisor regarding the method of transfer that will maximize their tax benefits.

Gifts in Kind may be made as current donations, through a Will or in certain situations (see section on trusts) the donation may be made with the provision that the donor, or the beneficiaries, retain the use if the asset for their lifetime.

Publicly Traded Securities

Individuals considering a donation that involves selling publicly traded securities to make the gift may be able to derive a significant Income Tax saving by donating the securities directly to the Foundation rather than making a cash donation of the same amount. It is possible and may be advantageous to donate appreciated securities directly to the Foundation. This includes shares, bonds, warrants and futures that are traded on Canadian and most foreign stock exchanges.

The 2006 Federal Budget significantly increases the tax savings for gifts of publicly traded securities. The amount of tax saving is dependent on the size of the capital gain - the larger the gain, the greater the tax saving will be. The donor must still report the capital gain on their Income Tax return, however, the tax credit they receive for the gift essentially shelters 100% of the gain from Income Tax.

Donors may also choose to elect a value for their gift for any amount between fair market value and the cost base. This allows them to limit or eliminate the capital gain on which tax is payable. A receipt will then be issued for the elected amount.

How to donate securities

Securities may be donated by:

1. Instructing a Broker to transfer securities from the donor's account to the Foundation account at RBC Dominion Securities. The gift is complete when the securities are received in the Foundation account.
2. Providing the Foundation with the endorsed certificates. The gift is complete on the day the certificate is delivered.
3. Re-registering the securities in the Foundation's name. The gift is complete as of the date on the new certificate. (This process is not recommended as it can take considerably more time.)

Donation receipts for gifts of securities are issued for their fair market value which is defined by Revenue Canada as the closing price on the date the gift is made.

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