Toll Free: 1-800-723-3342
Phone: 306-721-8888 Fax: 306-721-5118
Toll Free Fax: 1-866-840-5118
caradawntransport@sasktel.net
Tax benefits
The foundation is a registered charity and
will issue a donation receipt when the gift is
donated. The foundation may hold the gift
for several years (subject to certain rules).
A donor may claim a donation tax credit
for total gifts in a year up to 75 per cent of
his or her net income.
Effectively the after-tax cost of a $25,000
gift for a Saskatchewan resident in the
highest margin tax bracket is $13,044.
Examples of private
foundations at work
Example 1
One gift of mutual funds to multiple
charities
Bob and Mary live in Saskatchewan and
want to donate $5,000 to each of five small
charities in Regina. They have discussed
their intentions with the charities and have
been frustrated by the fact that the organi-zations
cannot accept mutual funds, on-ly
cash. Bob and Mary’s mutual funds cost
$15,000 and have a current market value of
$25,000. If Bob and Mary cash in the mutu-al
funds, they will be subject to $2,400 in tax
on the capital gain.
By creating a foundation, they can realize
their charitable goals. By gifting the $25,000
in mutual funds to their private foundation,
the foundation can convert the mutual
funds to cash to be granted to the charities
they wish to support. In this way, the cou-ple
avoids the $2,400 tax on the capital gain
and each of the charities receives a $5,000
cheque in Bob and Mary’s name.
Example 2
One gift now, years of grants in the future
Dave and Sue live in Saskatchewan and
have recently sold their business. The cou-ple
now has substantial cash reserves on
hand, as well as a large tax bill looming at
the end of the year. The couple has always
been charitably inclined and helped five
smaller charities that consistently do great
work. Given the size of these charities, the
couple knows that a $25,000 grant to each
charity would allow them to build critical
infrastructure and transform their long-term
operations. Unfortunately, in the ab-sence
of a conversation with each of the
charities, Dave and Sue are afraid the char-ities
will use the funding for current op-erational
needs. Furthermore, given the
lateness of the year and the immediate
need for a tax receipt, they will not have
time to meet individually with the charities
to discuss their intentions. By giving the
$125,000 in cash or securities to their foun-dation
now, they get a tax receipt to address
their tax bill and the time to speak to each
charity to discuss their forthcoming trans-formational
gifts.
Example 3
One gift, perpetual support for the causes
you care about
John and Suzie live in Saskatchewan and
would like to support three charities with
their ongoing operational costs. However,
they would also like the option to support
other charities if the need arises. Their
plan is to provide $5,000 to each charity.
In order to generate the $15,000 annually
at four per cent, they will need to depos-it
$334,000 into their foundation, which
in turn creates the funding to John and
Suzie’s foundation. The couple makes the
gift to generate an average return suffi-ciently
to pay out $15,000 annually. For an
after-tax cost of $173,724 John and Suzie
save $160,276 in taxes today while provid-ing
perpetual funding for the causes they
care about.
For more information on how a private
charitable foundation can support your
family’s philanthropic goals and create a
lasting legacy, contact a qualified finan-cial
planner experienced in planned giving
strategies.
FINANCIAL FILE
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