GREY MATTERS | PULL-OUT SUPPLEMENT
June 2012 | S11
If you have the prospect of significant capital gains when
you die, then your estate can be writing a big chunk to the “
government. You can write off a large portion of that or
eliminate it entirely with philanthropic efforts.” —Geoffrey Dyer, Bennett Jones LLP
Continued From Page S10
THE NUMBERS SPEAK FOR THEMSELVES
tive. For example, Zurowski says,
can provide an opportunity to be
“donating a percentage of the
estate rather than a specific
amount [means] the charity then
has the right to a full accounting
of the estate to make sure it gets
its proper percentage.”
For many wealthy Canadians,
the preferred option for giving
back while maintaining control
is to establish their own charit-
able foundation, often before
death. This can be attractive,
from both a financial and phil-
anthropic point of view. “There
are tax benefits to donating
while you’re alive, and you can
make sure the funds are used as
you wished,” Harris says.
recognized for their donations.
The best scenario for a suc-
cessful foundation is often one
that involves the entire family
and a desire to carry on the
charitable effort after the
founder has died. “That’s not
always the case,” says Harris,
who adds that a foundation “can
be an anchor but it can also be
Regardless of how the money,
or how much of it, is distributed,
there is one essential element.
“Clear communication is
critical to this process,” Zurowski
says. “Philanthropic planning is a
long-term endeavour and can
involve future generations, not
just current family and business
owners. A family needs to clearly
define what philanthropic inter-
ests they wish to concentrate on
and what their family values
around planned giving are.”
Individuals also need to take
a close look at their will — regu-
larly. “Wills are not something
you do once and forget about for
50 years,” says Dyer.
Time is of the essence, says
Harris. “You need to go back and
look at your will at least every
five years and more often as you
get older.” n
Giving is not the same as giving smartly. A chart prepared by BMO Harris Private Banking highlights the often
significant tax differences between cash and in-kind donations of securities.
and give cash
Market value of security
Taxable capital gain (50%)
Private foundations also allow
donors to showcase their phil-
anthropy, or not.
“People can make donations
Tax due on gain at 46%
privately,” Zurowski says. “This
may be helpful for large donors
who do not want to make a pub-
licly known donation and then
be approached by a large num-
ber of other charities.”
On the flip side, however, if
publicity is desired, foundations
Tax receipt for gift
Value of tax receipt at 46%
Net tax savings
*Example uses Ontario federal and provincial combined tax rate
A FEW FACTS ON GIVING
According to Leave a Legacy, there is little research available on planned giving in Canada. Still, the Ottawa-based
organization, which encourages charitable giving, has culled some data:
Canada Revenue Agency reports that there are 83,500 registered charitable organizations
in the country and 80,000 federal and provincial not-for-profit organizations.
Corporations are the
least likely to give.
In 2003, 3 per cent of
firms claimed charitable
donations in Canada.
Those claims totalled
reports that in 2006,
25 per cent of Canadians
who filed a tax return
claimed a charitable
donation. Those claims
In 2004 approximately 84
per cent of Canadians
made a financial donation
of some sort; however, 4
per cent left a gift in their
will. Today, 7 per cent leave
a gift in their will.
A 2008 Statscan report
found that, although
Nunavut had the lowest
rate of donors over
all at 10 per cent,
its median donation was
the highest, at $500.
A CLOSER LOOK AT CHARITABLE GIVING
Where there’s a will, there’s a committee. The House of Commons finance committee has launched a study of charitable
giving. It will examine, for both individuals and corporations, current and proposed tax measures to encourage charitable
giving. The up-close-and-personal look at leaving a legacy includes scrutiny of the charitable tax credit amount and the
possible extension of the capital gains exemption to donations of private company shares and real estate. The study will also
look into the feasibility and cost of changes to existing tax measures as well as the implementation of new tax incentives.
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