Making a gift of securities
In May 2006’s Federal Budget, publicly listed securities to charitable organizations became exempt from any capital gains tax. The 2008 Federal Budget included an amendment to the tax law, adding exchangeable shares to the list of securities that the tax treatment already applies to, which includes:
- Shares listed on most Canadian and certain foreign stock exchanges
- Prescribed debt obligations
- Shares of the capital stock of a Canadian public mutual fund corporation
- Units of widely held Canadian mutual fund trusts
- Interest in related segregated fund trusts
The benefits of donating a gift of securities to United Way Toronto are twofold. First, you will receive a tax receipt for the fair market value of the donation in the amount of the closing trading price on the day United Way receives the security. Second, your donation is exempt from the capital gains tax that typically applies to the sale of a security.
Donating Securities to United Way—it’s fast, it’s easy and both you and your community benefit!
An example of the tax benefit of donating securities to United Way
Example uses Ontario federal and provincial combined tax rate.
Donating securities to United Way Toronto involves two easy steps:
- 1. Complete United Way’s Gift of Securities Share Transfer Form
(PDF version—291 KB | Word version—120 KB) and contact us to let us know to expect your donation. At this time, we will provide you with our brokerage account information. Please note that the Share Transfer Form is for United Way’s records and does not initiate transfer of the securities.
- 2. Instruct your broker to transfer your securities to United Way’s brokerage account. Please do not transfer securities to United Way without notifying us first.
For questions or assistance, please contact May Chung at 416-777-1444 ext. 331 or email@example.com.
Frequently asked questions about gifts of securities
For more details on United Way Toronto’s approach to handling securities, please review the following information.
How does United Way handle gifts of securities and how long does the process take?
*Please note that the time required for Step 1 is longer when working with a discount brokerage or donating mutual funds.
Is there a minimum value of a gift of securities that will be accepted by United Way Toronto?
Yes, United Way Toronto will only accept gifts of securities valued at $1,000 or more. This limit reflects the high cost of processing this type of gift to both the donor and United Way due to costs such as the brokerage commission and market changes.
In addition, please note that a minimum of $1,000 must remain with United Way (includes United Way Toronto’s Community Fund, United Way Toronto priority areas, Areawide Community Fund, or other United Ways in Canada).
We value all donations and request that donors wishing to give a gift that is less than $1,000 do so via payroll, cheque or credit card.
When will United Way Toronto sell my security? What will be the value of my tax receipt?
United Way sells the securities immediately upon receipt. You will receive a gift-in-kind charitable tax receipt for the closing price of the security on the day that it is received in United Way Toronto’s account.
When will I receive my tax receipt?
Your tax receipt is issued and available once United Way Toronto receives the cheque for the sale of the security. This is typically within 10 business days of the date that the securities are received in United Way’s account.
I want to donate share certificates. What do I need to do?
Share certificates can be donated in the donor’s name or transferred to United Way’s name.
If donated in the donor’s name, the certificates must be signed and a photocopy of the front and back of the donor’s driver’s license or a signature guarantee on the certificate from the donor’s bank included, along with a letter from the donor directing the certificates to United Way (pro forma letters are available from United Way Toronto upon request). Please contact United Way at 416-777-2001 for more details.
How does United Way handle flow through shares?
As long as the shares have a Committee on Uniform Securities Identification Procedures (CUSIP) number and are eligible for sale on a Canadian and certain foreign stock exchange, the process for donating flow through shares is the same as regular traded shares. Please contact United Way at 416-777-2001 for more details.
Can I donate the proceeds from a sale of shares to United Way Toronto?
Yes, but this type of donation will be handled as a cash donation and will not benefit from the capital gains tax exemption applied to a gift of securities.
I’m with a discount brokerage. Will this impact the timing of the process?
Yes, typically the processing time to transfer the share from a discount broker can take up to ten business days. In the case of mutual funds, the process can take longer. Please contact United Way at 416-777-2001 for more details.
What is United Way Toronto’s process for handling exchangeable shares?
Exchangeable shares can be donated directly to United Way (typically in certificate form) or donated after they are exchanged.
If the shares are donated directly, United Way Toronto’s broker will exchange them for shares of the underlying company, which could take up to one week. The donor is receipted based on the closing price of the underlying shares on the date the exchange is complete. If the shares are exchanged prior to donation to United Way, the process is the same as any other share and the donor will receive a gift-in-kind charitable tax receipt for the closing price on the day that the shares are received in United Way’s account.
How does United Way Toronto handle designated gifts of securities?
As the cost of the processing securities is greater than with other types donations, a minimum gift of $1,000 must remain with United Way Toronto (includes United Way Toronto’s Community Fund, United Way Toronto’s priority areas, Areawide Community Fund, or other United Ways in Canada).
As per United Way Toronto’s Designation Service Fee Policy, a $12 processing fee is applied against each designation. However, you will be receipted for the full market value of the security when received by United Way.
How does United Way Toronto handle the difference between the receipted amount for a gift of securities and the net proceeds from the sale? How does this affect the designated portion of a gift?
United Way Toronto is only able to distribute the net proceeds from the sale of a gift of securities, which reflects the selling price minus the brokerage fees. This may be different from the receipted amount.
If you wish to donate a specific gift amount to United Way’s Community Fund or another charity that exceeds what is available for distribution based on the net proceeds, you may “top up” your donation to compensate for any shortfall arising from a loss/fees on the sale of the securities.
Which brokerages does United Way Toronto deal with?
United Way Toronto is fortunate to have relationships with all of the major brokerages in Toronto including CIBC Wood Gundy, BMO Nesbitt Burns, Scotia iTrade, TD Waterhouse, and RBC Dominion Securities. Please contact United Way at 416-777-2001 for more details.