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Charitable Giving to Soar in Canada?

February 13, 2006

(Feb. 13, 2006) A special report released by Toronto-based TD Economics finds that charitable giving in Canada will “soar” if the federal government moves to eliminate the capital gains tax on gifts of securities to charity.

The proposal, long championed by AFP, is expected to be included in the upcoming budget proposed by the Conservative government. The Conservative Party explicitly mentioned this proposal during the previous campaign, and it has the support of other political parties as well.

In past years, the Standing Committee on Finance included such a proposal in its Prebudget Consultations report, but the provision was never acted upon.

50 Percent or Even Higher Growth

The TD Economics report suggests that contributions of stock could rise by 50 percent or even higher once donors realize “how attractive it will be to donate publicly traded shares.”

According to the paper, Ottawa halved the capital gains rate on stock donations from 50 per cent to 25 per cent in 1997, helping to accelerate such giving from $69 million that year to $200 million by 2000.

The total outstanding market value of securities held by Canadians is estimated at $1.3 trillion, and almost half of that represents unrealized capital gains.

Both the Liberals and Conservatives have estimated that foregone tax revenue will total about $50 million annually.

More than 80 percent of $22 million donated to TD’s Private Giving Foundation by the end of December 2005 came in the form of donated securities, according to Jo-Anne Ryan, executive director of the foundation.

“With the total elimination of capital gains, I think it will open the floodgates for charitable donations to all charities,” Ryan said in an interview in Vancouver. “We see a lot of people sitting on securities that may not be going anywhere and this could be the encouragement for them to start donating.”

A copy of the report is available on the TD Economics website. TD Economics is part of the TD Bank Financial Group, a financial products and service corporation.

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