Let’s assume that you have a security in your investment portfolio, 1000 shares of Bell Canada “BCE” that you acquired years ago in January 2006 at $27.81.

The actual value of BCE shares closed on Friday 2019/10/04 at $48.63

So, let’s look at 2 scenarios and how you can maximize your tax benefits.

Scenario # 1:

  1. Sell the 1000 shares on Friday 2019/10/04 at the closing price of $48.63 for a total of 48,630 less selling commission which we will ignore for the purpose of this example
  2. You take the proceeds of $48,630 and write a cheque to SMSD The Chapel for the $48,630
  3. You will receive a Donation Tax Receipt in the amount of $48,630
  4. When you file your income tax return at the end of the year you will have to declare a Capital Gain of $20,820 which you will have to pay income taxes on 50% of your Capital Gain or $10,410 which will be added to your other taxable income
  5. Your tax bite will be based on the tax rate based on your total taxable income
  6. Let’s assume a low tax rate of 30%, your income tax payable will be $3,123

 

Scenario # 2:

  1. You do not sell your 1000 BCE Shares, but you donate the shares to SMSD The Chapel on Friday 2019/10/04
  2. SMSD The Chapel will issue to you a Donation Tax Receipt in the amount of the closing Market Value of the BCE Shares on the same date which is $48,630
  3. Since you did not sell the BCE Shares but donated them to The Chapel, you have no Capital Gain nor taxes to pay on the donation transaction
  4. Your benefit in following Scenario # 2 is $3,123 in Income Tax Savings