The Mackenzie Charitable Giving Program allows investors to make the most out of their donations.
Imagine you are an investor with $135,000 in investment assets and have $25,000 in non-registered mutual funds to establish a charitable giving account. You are unsure about how the tax savings would apply on a donation in-kind, compared to selling the fund and donating the cash proceeds. Here is how your donation breaks down in either option:
|Donation in-kind||Donation in Cash|
|Value of Donation||$25,000||$25,000|
|Capital Gain Inclusion Rate||0%||50%|
|Taxable Capital Gain||$0||$5,000|
|Tax (Assuming 36% Tax)||$0||($1,800)|
|Donation Tax Credit||$9,000||$9,000|
|Net Tax Savings||$9,000||$7,200|
By making an in-kind donation, you will have a $9,000 charitable donation tax credit that you can apply towards your other income tax for the current year or in any of the next 5 years. By selling the fund and donating the cash, you will only have a $7,200 tax credit, because you will have to pay $1,800 in tax on the capital gain that resulted from the sale.
Use our calculators to build your own scenarios.
Discover the impact a charitable donation can have on taxes.
Learn how donations can reduce capital gains tax.
Generate a summary of the potential tax savings from donating a security.