Give gifts to your family and the causes you care about

Your generosity can go further with gifts made through your estate planning.

You can give to charities:

  • indirectly through your Will (learn more Will Power), or

  • directly as a beneficiary of your RRSP, RRIF, TFSA, segregated funds or life insurance

How can you make your charitable gifts go farther?

Canada has unusually generous incentives that too few use.

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Consider Noncash Gifts

Gifts via cash, cheque or credit card are convenient. That's fine for small gifts. Larger gifts benefit from planning.

When you sell assets that have grown in value, you're taxed on the gain (e.g., stocks, bonds, mutual funds). This leaves less dollars to donate.

There's another way. If you donate the asset the charity sells it. As a result:

  • You get a tax receipt for the fair market value of your gift after the charity sells the asset, and

  • You eliminate all the tax on the capital gain

Your gift costs less than selling the asset and donating the cash.

Consider Gifts At Death

The biggest tax bill for many Canadians occurs at death (or the second death, in the case of a couple). This is also when charitable gifts provide the biggest tax savings. The donations can be 100% of net income for two tax returns: the year of death and the year preceding death. Unused amounts can be used up to 75% of net income for the following three years.

In contrast, a gift made while alive is limited to 75% of net income in the year given. Unused amounts can be carried forward and used during the following give years.

Consider A Donor-Advised Fund

You have have many accounts: savings account, chequing account, investment account, Tax Free Savings Account, retirement savings account (RRSP). Why not a flexible vehicle solely for giving? This is called a Donor-Advised Fund (DAF).

Your Donor-Advised Fund lets you separate giving from granting:

  • Giving: decide how much to contribute, when to contribute, how to invest

  • Granting: decide on the charities, how much to grant and when to grant. In the meantime, the assets in your DAF grow tax-free.

You can setup a Donor-Advised Fund through your

  • Investment Advisor

    • Knows you

    • Manages your other investments

    • Helps you understand how much you can give afford to give through your ongoing financial planning

  • Community Foundation

    • Knows the local issues

    • Often manages the investments for you

Involve Your Family

If you would like to involve your family, you can setup a giving account (a donor-advised fund).

You can enable your family to direct where to make gifts by setting a giving account (a donor-advised fund). This gives more flexibility

Explore How Life Insurance Helps

Create Gifts
With Life Insurance

Small, affordable premiums for permanent life insurance create a large death benefit.

When the charity is the policyowner and beneficiary, the donations you make for the premiums give you a tax receipt.

The tax savings further reduce the cost of your gift. The premiums can end in 10 or 20 years.

Replace Gifts
With Life Insurance

If you're making a sizable donation now, you're having impact now but losing the donated assets and future growth on them.

You can allocate the tax dollars saved towards permanent life insurance. Here the face amount matches the amount of your gift and the death benefit is structured to increase each year.

Example: replace a charitable gift of $1,000,000 (or $100,000 a year for 10 years) with $1,000,000 of life insurance and fund the premiums with the tax savings — $500,000 if your marginal tax rate is 50%.

Reduce Taxes
With Life Insurance

Some or all of the death benefit from your life insurance can go to charities or your giving account.

You maintain full control and can change your beneficiaries.

You also create a large donation to help with the large tax bill at death.

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