Making a gift of securities

By donating publicly traded shares to United Way, you will not pay the capital gains tax normally associated with such a sale. This means that you receive a tax receipt for the full value of the shares but are NOT taxed on any gain. Donors of securities therefore do not need to take any capital gain into income.

Your charitable receipt will reflect the closing price of the shares on the date they are received in United Way’s brokerage account.

Note: Actual shares must be transferred to United Way. If shares are sold and then the proceeds donated to United Way, the enhanced tax benefits do not apply.

If securities acquired under an employee stock option agreement (or proceeds from the sale thereof) are donated to United Way, the donor:

  • eliminates the employment benefit that the donor would normally be required to take into income*, and
  • receives a tax receipt for the fair market value of the shares or proceeds, depending what is contributed;

provided that the security is a publicly listed security or a share or unit of a mutual fund and the donation is made in the same year and within 30 days of the exercise date.

To do this the donor must exercise the options and instruct the broker to immediately sell the shares. The donor then instructs his broker or the company selling the optioned shares to send a cheque to United Way for the full proceeds from the sale. Alternatively, the donor can donate the securities (after the options have been exercised) to the charity without selling them.

For example, if an individual owns options at $5.00 per share and the shares are worth $15.00 on the exercise date – if the person exercises the options and immediately donates the proceeds – the benefit of $10.00 per share will not have to be included in income and the donor will receive a tax receipt for $15.00 per share, as long as the gift is made within the same tax year and within 30 days of the exercise date.

* If an individual did not donate the exercised option, they must include as employment income the benefit they received byway of purchasing the shares at a lower than market price. This is calculated as the fair market value on the exercise date less the option price. This benefits is taxed as employment income and not as capital gains.

How to make a gift of publicly traded securities to United Way

To assist donors, United Way has made making a gift of securities a simple two-step process.

  1. complete the share transfer form: pdf version (160 KB) | word version (97 KB).
  2. transfer your securities to United Way’s brokerage account. (May Chung will provide you with the appropriate account number.)

The entire transaction can be easily accomplished over the phone by calling United Way at 416-777-1444 ext.637 and speak with May Chung who will assist you.

  • United Way will then issue a gift-in-kind tax receipt representing the closing price of the shares on the date that they are received in United Way’s brokerage account.
  • The donor will report the sale of these securities in their tax return when completing CRA’s T1170 form and not include any taxable capital gain as a result of this transaction.
  • A donation tax credit will be calculated and claimed in the donor’s tax return for the year. A combination of the Federal and Provincial tax credits will result in a total benefit of approximately 46%, based on the donor’s net annual taxable income. (See example below.)

Here is an example:

gift of securities comparison chart

Please consult your own professional advisor for information tailored to your own circumstances and to confirm applicable tax benefits.

To confirm your transaction, fax the completed form to May Chung at United Way: 416 777 0962 or mchung@uwgt.org.