You can invest online, file your taxes online and make a charitable donation online. And now there may be an easier way to combine all three for maximum tax savings.
As a result of the 2006 federal budget, if you donate publicly-traded shares, mutual funds or segregated funds to a registered charity, you get a tax receipt equal to the fair market value of the securities or funds being donated, and you also avoid paying capital gains taxes on any of the property being donated.
While this tax change has been welcomed by high-net-worth philanthropists, stimulating them to donate millions of dollars of company stock to major charities, it has pretty much gone unnoticed by the masses, who feel that administratively, it's just too burdensome to pursue.
Normally, the donor wishing to donate shares or funds would have to contact each charity, fill out a share transfer form and send it to each charity to begin the transfer process. This becomes quite complicated if you want to donate the shares to multiple charities, as you would have to repeat the process for each charity you wish to benefit.
That's where CanadaHelps. org steps in. The online public charitable foundation serves as a national not-for-profit donation portal that allows you to donate to any of Canada's 80,000 charities, from national organizations like the Canadian Cancer Society to your local church or synagogue.
CanadaHelps' motto is "Giving made simple" and it has now done that for "in-kind" donations. You fill in your basic personal information on the Web site, selecting the charities you wish to donate to from an online database. You then provide details of the stocks or funds being donated and the details of where these securities are being held.
Upon "check out," you are asked to print out a "Letter of Direction" to be signed and sent to your broker authorizing the transfer of securities to CanadaHelps.
An e-mail will automatically be sent from CanadaHelps to your financial advisor telling him of the pledge and you will receive your tax receipt via e-mail once the shares or funds have been received by CanadaHelps. The receipt is based on the closing price of the securities on the day they are received by CanadaHelps.
While CanadaHelps does not charge any transfer fees, they do charge a 3% transaction fee, which covers all brokerage fees, banking costs, receipting, reconciliation and disbursements. The 3% fee is deducted based on the proceeds of the sale of securities you donated, before the donation is sent to the charity.
With Bell Canada stock set to go private by the end of the second quarter, investors who are sitting on holdings with significant accrued capital gains may wish to consider donating their stock "in-kind" for maximum tax savings.