GUEST COLUMN: A charitable legacy

Kirbey Lockhart provides some advice on long-term charitable giving

When it comes to charitable giving, you have a number of different options that can help you achieve your philanthropic goals, while at the same time providing you with some tax relief.

Donating securities – The federal government has introduced several new tax incentives in recent years to encourage charitable giving by Canadians, including the elimination of capital gains tax when you donate publicly listed securities to qualified charities. Not only do you receive a tax break, you also receive a donation receipt equal to the fair market value of the donated security.

For example, due to the donation tax credit, your out-of-pocket cost for making an in-kind donation of a security worth $100,000 with a cost, of say, $40,000 is approximately $55,000. However, if you sold the security first and then donated the cash, your out-of-pocket donation cost would be $70,000 due to paying about $15,000 in capital gains tax.

Charitable foundation – Another tax-effective charitable giving strategy is setting up your own charitable foundation. A private foundation gives you a high level of control and flexibility with respect to charitable giving, and enables you to create an enduring charitable legacy.

You can make donations to your own foundation, and you will receive a donation tax receipt like any other donation. However, to maintain its charitable status, your foundation must meet its annual disbursement quota – 3.5 per cent of the foundation’s assets, must be spent on charitable activities, or on gifts to qualified donees.

While providing a great deal of control and flexibility, a private foundation also involves certain costs and administrative requirements that must be considered. An alternative to a private foundation is making tax-deductible donations to a public foundation. Public foundations are very similar to private foundations in many respects, but involve less cost and administration.

Although you do not have outright control now, you can still recommend to the public foundation’s directors which charities should receive grants. Similar to private foundations, in-kind donations of publicly listed securities to a public foundation are eligible for the zero capital gains inclusion rate.

Depending on your age and needs, there are other creative charitable giving strategies, especially those using life insurance, to reduce taxes and significantly increase your charitable contribution after death to your favorite charity.

Kirbey Lockart is an investment advisor with RBC Dominion Securities. This article is provided for information purposes only. Please consult with a professional advisor before implementing a strategy.

 

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

A windstorm Wednesday, Jan. 13, 2021, hit Lake Country hard closing Hare Road while crews respond to a broken water main. (District of Lake Country - Facebook)
TAYLOR: Discovering the essentials of life

Calendar columnist Jim Taylor reflects on last week’s windstorm

A Vernon man's faith in humanity has been restored since his lost wallet was returned, credit cards, cash and all, to the RCMP station. (Contributed)
Good Samaritan turns in cash-filled wallet to Vernon Mounties

Owner’s faith in humanity restored following a tough few weeks

Vernon Fire Rescue Services responded to a single-vehicle rollover Wednesday, Jan. 20, 2021, after a vehicle came into contact with a pedestrian light pole at Kalamalka Lake Road and 14th Avenue. (Brendan Shykora - Morning Star)
Minor injuries in rollover after vehicle hits Vernon crosswalk pole

The vehicle flipped onto its side, closing Kalamalka Lake Road

Vernon's Noric House long-term care facility is dealing with an influenza outbreak amid the COVID-19 pandemic. (File photo)
Two more deaths at Vernon care home

Noric House case numbers remain steady, but death toll rises

The BC SPCA is adapting its fundraising after cancelling events due to COVID-19 restrictions. (Twila Amato - Black Press Media)
BC SPCA gets creative with fundraising as pandemic continues

The non-profit’s in-person fundraising events all had to be cancelled due to COVID-19 restrictions

Vancouver Canucks’ Travis Hamonic grabs Montreal Canadiens’ Josh Anderson by the face during first period NHL action in Vancouver, Wednesday, Jan. 20, 2021. THE CANADIAN PRESS/Jonathan Hayward
Horvat scores winner as Canucks dump Habs 6-5 in shootout thriller

Vancouver and Montreal clash again Thursday night

Interior Health has declared the Cariboo Chilcotin a community cluster. (Angie Mindus photo)
Interior Health declares Cariboo Chilcotin region a COVID-19 cluster, 215 cases since Jan. 1

Most cases are related to transmission at social events and gatherings in Williams Lake

Penticton city council heard from Dhorea Ramanula, of Paid Employment for People with Lived Experiences Tuesday, Jan. 19. Ramanula’s organization has operated public washrooms in Kelowna staffed by community support workers since April, she says Penticton could benefit from a similar facility. (Michael Rodriguez - Kelowna Capital News)
Penticton interested in new public washroom concept to combat vandalism

Public washrooms with on-site support staff have been operating in Kelowna since April

Canada Post had remove a lot of letter boxes around Penticton after they were vandalized. This letter box at the United Church on Main St. remains unscathed. (Monique Tamminga Western News)
Street mailbox vandals strike Penticton drop boxes

Canada Post had to remove a bunch of the vandalized units

Esa Carriere, 23, was the victim of a 2018 Canada Day homicide. (File)
Youth sentenced in Kelowna Canada Day killing

Young woman pleaded guilty to lesser assault charge, sentenced to 15-month intensive support and supervision program

A rendering of UBC’s planned downtown Kelowna campus. (Contributed)
Kelowna’s new downtown campus to help alleviate UBCO’s space crunch

The sizable development is anticipated to be completed by the fall 2024 semester

Eighteen-year-old Aidan Webber died in a marine accident in 2019. He was a Canadian Junior BMX champion from Nanaimo. (Submitted)
Inadequate safety training a factor in teen BMX star’s workplace death in 2019

Aidan Webber was crushed by a barge at a fish farm near Port Hardy

Most Read