Donating Stocks to avoid capital gains while getting a donation credit

Giving should always be part of your financial and tax plan.  When you give you receive, and although that should never be the motivation of giving, it is an important fact.  Many people have realized that donating to charities can save significant tax savings.  Donating can save taxpayers hundreds of thousands of dollars in taxes by giving strategically. 

Giving stocks is not new, however over the last few years the rules are different in that their used to be a capital gain triggered when you donated a stock.  Now when you donate qualified stocks to a registered Canadian charity there is no capital gain triggered, yet you still receive the full donation credit for the value of the stock.

This can be particularly beneficial in the case of Flow Through and Super Flow Through Shares that have been acquired, considering there was already tax benefits for acquiring the Flow Throughs in the first place!  Although it is typically better to donate personally, many would ask what to do if they have stocks owned by a corporation.  In that case you could still donate the stock and receive a tax deduction for your corporation (instead of a tax credit) and the corporation would not trigger a capital gain.  This would also free up room in your capital dividend account to issue yourself or other shareholders tax free dividends.

Step 3: Legally Minimize Taxes Paid part 3

Here are more ways you can save tax.

• Trust Structures – Trust structures can protect your assets and pass them to the next generations. Trusts can be used for effective tax minimization through income splitting.
• Tax Shelters – Generate new tax credits and support humanitarian causes. Tax shelters help the less fortunate while helping you to save taxes at the same time.

Other Tax Saving Strategies include Tax Deferral Strategies and Flow Through Shares.

• A Tax Deferral Strategy is an arrangement where you get tax benefits immediately but will most likely pay it back at a later date. Aside from its tax benefits, the tax deferral strategy allows individuals to support Canadian humanitarian initiatives.
• Flow Through Shares are common shares of Canadian resource companies issued to finance the exploration an development of resource properties. To encourage investment by these companies, the federal government allows exploration and development expenses incurred to be flowed-through to investors and deducted for tax purposes.

It is more important now than ever to be able to find ways to save on your taxes. There may be a lot more ways for you to save on your taxes so make sure you consult with a professional. Consulting with a professional and having him help you set up a tax plan will ensure that you make use of all available tax saving strategies applicable to you.