Behind the Headlines March, 2006

Article Excerpt

During the recent federal election campaign, the Conservative minority government of Stephen Harper promised to remove the capital gains tax on listed stocks donated to charities. The conservative proposal will make it even more cost-effective to give stocks to a charity, rather than sell the stocks and then give cash. Right now, if you donate stocks you own to a charity, you include one-half of the capital gain realized on the donation in income for tax purposes. The inclusion rate for capital gains into income is 50%, so you pay tax on 25% of the gain. For example, let’s say you are in the top 50% tax bracket. The first $200 you give to charity gets a tax credit at the lowest marginal tax rate. The next $1,000 gets a credit at the highest marginal tax rate. That $1,000 cash gift will cost you $500 after a $500 tax credit. Under the present rules, if you give stocks worth $1,000 that you paid, say,…

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