This article was originally published by the Jewish Foundation of Greater
Toronto.
The tax benefits that arise from cash donations and the donation
of publicly-traded securities are quite well-known and are often
used by taxpayers to meet their charitable objectives and reduce
their tax bill. However, the tax benefits that can arise to
taxpayers from the donation of private company shares are often
overlooked and are not widely considered as part of tax planning
strategies.
The Tax Results
At first glance, it would appear that the donation of private
company shares can never be beneficial. Unlike the case where
publicly-traded securities are donated, any difference between the
fair market value (“FMV”) and the
adjusted cost base (“ACB”) of the
private company shares will be subject to a capital gain and taxed
accordingly upon the donation. However, the tax benefits can still
be significant.
