The Planned Giving Primer with Lorne Steinberg

What are some basic things to consider during year-end tax planning?

LS: As the end of the year approaches, you should always review your tax planning ideas in general, and your charitable giving plans in particular. It is important to keep in mind that sound tax planning cannot be looked at on a year-by-year basis. To maximize the benefits that can be reaped through smart planning, one must embrace a multi-year strategy that involves postponing one’s income, increasing one’s deductions and taking advantage of special opportunities that can allow you to make a gift that will lower your tax liability for this year, but that you only have to pay for next year.

Could you give a concrete example?

LS: You can charge last-minute donations to the McGill University Health Centre (MUHC) Foundation to a credit card. Since the card will be debited to your account in the current year and the Foundation will have received your payment before the end of the year, that is the year for which you will be eligible for a charitable income tax deduction, even if you only pay the credit card bill next year. And, depending on the card you use, you may even be able to benefit from their loyalty points program.

Does the same hold for a donation made by cheque?

LS: If you make a donation to the MUHC Foundation by cheque, and the Foundation doesn’t receive the money until the next year, you will still be eligible to take a charitable income tax deduction for the current year if the cheque is postmarked on or before December 31.

Given the particular fiscal conditions this year, are there any strategies donors should consider?

LS: Yes. Donating shares with large unrealized capital gains is one of the least costly ways to make a donation. As many people are aware, Bell Canada Enterprises (BCE), the company representing the most widely held stock in Canada, is almost certain to be privatized. For the thousands of Canadians with BCE stock in their portfolios, this will mean disposing of their shares, which in many cases will result in a hefty capital gain. One way to avoid paying the capital gains tax is by gifting BCE shares to the MUHC Foundation. You will not only save the capital gains on the shares, you will be supporting a most worthy cause and will receive a tax receipt for the value of your gift.

Any final words of advice?

LS: Really, year-end tax planning is about putting yourself in a position that will yield the most favourable tax benefits both this year and in future years, given your overall personal and charitable goals. You should discuss your charitable giving plans with your financial or tax advisor. The Foundation’s Planned Giving Committee is also in a position to answer any questions you may have regarding year-end gifts. To speak to one of our specialists, contact us at 514-931-5656.