GUEST COLUMN: Creating your legacy

When it comes to charitable giving, you have a number of different options

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.

This article appears in the RBC Dominion Securities guidebook, Family Wealth Management – Ten Strategies to Build and Protect Your Family’s Wealth. Contact 250-549-4069 for a complimentary copy.

Kirbey Lockart is an investment advisor with RBC Dominion Securities. This article is provided for information purposes only.

 

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

Just Posted

Bear fails to interrupt golfers in Vernon

‘It definitely was hard to putt with a bear that close, but we got it done’

Strong thunderstorms expected for Shuswap, Okanagan this weekend

Environment Canada meterologist also warns of heavy wind, rain and a potential for flooding

Toddler in Enderby airlifted to hospital after suffering serious burns

Vernon’s Advanced Life Support paramedic crew was called to the scene Thursday afternoon

Improper waste disposal in Armstrong leaves worker with serious injury

The city’s waste collection contractor has seen two incidents of improper disposal in as many weeks

Collision in Vernon leaves van on its side

No apparent injuries were sustained as a result of the Friday morning crash

Only four new COVID-19 cases, 228 active across B.C.

Health officials watching as activities ramp up

Chef brings farm-to-table approach to new Shuswap restaurant

Darren Bezanson opening Bistro 1460 at Hilltop Inn

Trudeau acknowledges racial unrest in U.S.; ‘We also have work to do in Canada’

‘Anti-black racism, racism, is real; it’s in the United States, but it’s also in Canada,’ Trudeau says

EDITORIAL: Revisiting alcohol consumption

A proposal to allow alcohol consumption in some public spaces in Penticton deserves consideration

State of Local Emergency declared for Boundary as communities brace for river flooding

Warm weather and heavy rain could cause sections of Kettle River system to swell beyond 2018 levels

Large cruise ships barred from Canadian waters until end of October: Garneau

Last year 140 cruise ships brought more than two million visitors to Canadian ports

Princeton schools ready to open Monday

Parents are must now decide whether their children will go back to… Continue reading

Minneapolis cop who knelt on man’s neck charged with murder

Arrest comes after three days of protests, which escalated in violence as demonstrators torched a police precinct

Summerland businesses optimistic as reopening begins

Businesses make plans for restructuring as COVID-19 restrictions are relaxed

Most Read