Stocks/mutual funds

Donating stocks or mutual funds to Mill Woods United Church through the United Church of Canada Foundation offers several benefits. For one, capital gains tax is forgiven, which increases your after-tax benefit.

Example: Joe has 50 shares of XYZ stock he bought for $20 a share, and which are worth $120 a share today. He plans to donate the value of these shares to Mill Woods United Church. He could sell the stock and have a $5,000 capital gain, which, at the marginal rate of 35%, would give Joe a $875 tax bill. Alternatively, he could donate the stock to MWUC through the United Church of Canada Foundation in which case the capital gain is forgiven, and Joe gets a tax credit for a $6,000 donation. By donating his stocks through the Foundation, Joe saves $875 of tax on his contribution.

Joe makes $2,950-1,000 original cost of investment = $1,950 profit after tax by donating stock. But if he sold the shares and donated the cash, he would make $2,950-$1,000 original cost -$875=$1075 profit. In both cases the church would receive a $6000.00 donation.

Donating shares Writing a cheque after selling shares
1. Value of the shares $6,000 $6,000
2. Original purchase price $1,000 $1,000
3. Capital gain $5,000 $5,000
4. Taxable gain at 50% $0 $2,500
5. Donation tax credit at 50% $2,950 $2,950
6. Tax on capital gain at 35% $0 $875
7. Net profit return to taxpayer after original cost of stock and after tax. $2,950 – 1,000 = $1,950 $2,950 –$1000- $875 = $1075
8. Donation receipt $6,000 $6,000

Limitations

  • Up to 75% of a taxpayer’s net income can be claimed as donations, except in the year of death or the year preceding death, when 100% of net income can be claimed as donations.
  • The tax owing in the year of donation cannot be reduced below $0.00.
  • You can carry donations forward for 5 years.
  • The gift must be over $300.

How to donate stock or mutual fund

  1. The United Church Foundation acts as the facilitator of this process.
  2. Contact the United Church Foundation at phone 1-866-340-8223 or go to the website
  3. Let the foundation know where the proceeds are to be sent i.e. Mill Woods United and who your broker is
  4. They will send you a Transfer Form to complete and have you send a copy to the Foundation and fax a copy to your broker. This ensures they are able to provide you with a receipt and know what you want us to do with the proceeds of the sale. This form will be customized for your brokerage.
  5. Your broker transfers the stock or mutual fund you directed to the Foundation.
  6. The Foundation sells the securities as soon as possible and then passes on the proceeds to the organization you listed on the form.
  7. The Foundation provides you with a tax receipt for the value of the shares or mutual fund units at the close of the markets on the day the Foundation receives them.