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Charitable Donations

(12) Qualifying securities generally include publicly traded shares, shares/units of mutual funds

and certain types of debt obligations. Generally, the capital gains resulting on the donation

of such securities and the exchange of unlisted securities that are shares or partnership

interests for publicly traded securities that are later donated are not taxable provided

certain conditions are met.

(13) The amount chosen in respect of the donation cannot be greater than the fair market

value of the property and not less than the greater of the property’s adjusted cost base

and the benefit received as a result of having made the donation. This chosen amount

should be used to calculate any taxable capital gain or recapture, as well as the donation

credit. Generally, this will result in up to 100% of any taxable capital gain or recapture

created from the donation of the property being sheltered by the donation credit.

(14) Donations made in both the year of death and under the individual’s will can be claimed

in the year of death and, if necessary, carried back to the preceding year. The 100% net

income limitation applies to both the year of death and the preceding year. In the year of

death, an individual can claim the lower of 100% of net income, or the eligible amount of

the gifts created in the year of death, plus the unclaimed portion of gifts made in the five

years before the year of death. The donation credit may also be claimed on donations of

registered retirement savings plans, registered retirement income funds, tax-free savings

accounts and life insurance proceeds made by direct beneficiary designations on death.

Effective for 2016 and subsequent years, the 2014 federal budget proposed that donations

made by will (and designated amounts) will no longer be considered to have been made by

the individual, but rather will be considered to have been made by the estate at the time

that the property transferred to the qualified donee. The trustee will have the flexiblility to

claim the donation in the year the donation is made, in an earlier year of the estate or the

last two years of the individual. The donation must be made in the first 36 months

following the individual’s death. An estate will continue to be able to claim a donation

credit for other donations in the year that the donation is made or in any of the five

following years.

(15) Corporations receive a deduction in calculating taxable income for donations made in the

year or in the previous five years, although unused deductions cannot generally be

claimed after an acquisition of control. The net income limits and the capital gain inclusion

rates for corporations are the same as those applicable to individuals except that gifts

made to certain Crown agencies and foundations are entitled to a donation deduction of

up to 100% of net income.

For Quebec purposes, the carry-forward period for donations made by corporations is 20

years.