Gifts cut taxes, boost care
Sponsored Content - Mar 29, 2024 - Think Local

Photo: Contributed
Through a gift of securities to the KGH Foundation, the Hamiltons gained significant tax savings and strengthened the hospital’s ability to provide enhanced patient care and specialized services.

While we are all dealing with tax season, it’s never too early to consider ways to reduce or eliminate taxes. Making charitable donations is a smart, effective strategy many people use. Changes to the tax act are on the horizon, and it may be in your interest to ensure your timing is good.

The timing was right for KGH Foundation donors Nancy and Terry Hamilton. 

A meaningful contribution to care

The Hamiltons have both required the specialized care provided at Kelowna General Hospital. From Terry’s open heart surgery to Nancy’s lung cancer diagnosis, surgery and subsequent cardiac complications requiring treatment, the Hamiltons are no strangers to KGH.  

“We always received excellent care at KGH,” Terry says. “The facilities, the staff, all have been quite incredible. It was not a difficult decision to choose to give back.”

Initially, Nancy and Terry supported the KGH Foundation more traditionally—with a cash gift. Then Terry learned about the tax benefits about giving a gift of securities. He looked into it with the couple’s financial advisor, found it was a win-win, and made it happen. 

“Our decision to give a gift of securities meant that the hospital received a larger sum compared to selling the stock and donating the funds,” Terry says. “This worked well for us because we had securities that had increased in value that we were able to give as a gift, and we didn’t pay tax on the capital gains.

“For people who are able to, this is a powerful way to give.”

Enhance the power of your giving

Patrick Ng, an investment advisor with RBC Dominion Securities and chair of the Planned Giving Committee with the KGH Foundation, helps his clients enhance the power of their giving. “More and more, people are looking for innovative ways to maximize their impact on the causes that are meaningful to them—and health care often tops the list because it is one cause that touches every one of us,” he says.

“Instead of giving cash, a client can donate securities directly to a charity like the KGH Foundation and receive dual benefits. Every donor makes a difference in health care at Kelowna General Hospital, and with a direct gift of securities, they can also benefit from the substantial advantage of eliminating capital gains tax.”

For now, all donors will receive a tax credit for the full market value of any appreciated securities being donated without incurring capital gains tax. “So if you’ve got investments that have done well, you could chose to donate some of those investments to the KGH Foundation and actually save money on taxes while also advancing excellence in health care,” Ng says.

Proposed AMT changes looming

Considering a gift of securities right now is important for donors who may be subject to the proposed alternative minimum tax changes by Canada Revenue Agency. While not yet in effect, the changes are expected. Draft legislation was released by the government in August 2023, and many tax practitioners have warned of unintended consequences around charitable giving. These changes—once put into practice—would alter the tax landscape for some donors quite dramatically. 

Although legislation is still in draft, publicly traded securities donated by individuals to registered charities will all be affected by the AMT changes initially proposed to take effect Jan. 1, 2024. 

When the legislation is tabled, changes to the AMT will come into effect. The proposed rules include 30% of the capital gains as AMT income, and on top of this, the charitable tax credit under the new AMT regime will be reduced from 100% now to just 50%.

“The changes to the AMT are intended to ensure that high-income earners pay a minimum level of tax,” Ng says. “But the ability to leverage personal charitable donations for tax relief will be reduced.” 

These changes will also further hit charities, which the CRA reports are seeing both decreasing donation amounts and numbers of donors, while at the same time facing the skyrocketing need for their services.

Make an impact now

If you are considering—or believe now is the time to start—donating securities, the delay in AMT implementation presents donors with a window of opportunity. 

Real-life examples, such as Nancy and Terry Hamilton’s contributions, underscore the profound impact that every gift of appreciated assets can have. The couple gained significant tax savings and strengthened KGH’s ability to provide enhanced patient care and specialized services. 

“By acting now, before the proposed AMT changes come into effect, donors can still take full advantage of the existing tax benefits associated with a gift of securities while amplifying their personal ability to support the transformative work of organizations like the KGH Foundation,” Ng says.

“Without a doubt, philanthropy supports important work in our communities. Everyone who sees a need and can be part of this work to effect positive change deserves to fully achieve their financial and philanthropic goals. Now is the time to make it happen with the greatest impact possible.” 

For information about giving a gift of securities, visit the KGH Foundation website or call director of planned giving Colleen Cowman at 250-862-4300 ext. 27011.

This article is written by or on behalf of the sponsoring client and does not necessarily reflect the views of Okanagan Edge.


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