Shares and Securities

Appreciated Publicly Traded Securities

Donated securities can take the form of stocks, bonds, mutual funds, warrants, and options.

A donation of appreciated publicly traded securities to the University of Alberta is a cost effective way of supporting an area or program that is important to you. As a result of the 2006 Federal Budget, the capital gain resulting from transferring securities to the University is not taxed.

Donors receive a charitable tax receipt for the full market value of the donated security. Any receipt amount not claimed in the year of the donation may be carried forward to be used during the next five years.

In comparison, when securities are sold and the proceeds donated to the University, donors are taxed on 50% of the capital gain.

If provided through a bequest (directions regarding a donation in your will), the donation will result in a tax credit which may be used to offset up to 100% of the taxable income on the terminal tax return. Any excess can be carried back into the preceding year as well.

Example (for illustrative purposes representing a donor residing in Alberta)

Vern and Louise Nuissant purchased stock four years ago for a total value of $12,000. Today, the stock is valued at $50,000. The Nuissants decide to make a gift of securities to the University of Alberta, naming the "Vern and Louise Nuissant Physical Hydrogeology Lab" housed in the Centennial Centre for Interdisciplinary Science (CCIS).

By transferring securities that have a fair market value of $50,000 to the University of Alberta, the Nuissants

• Receive a charitable tax receipt for $50,000
• Receive a tax credit of $25,000
• Avoid $7,410 in capital gains tax* (assuming the highest marginal tax rate in Alberta of 39%)

*$50,000 - $12,000 = $38,000 capital gain $38,000 x 50% = $19,000 x 0.39 = $7,410

Privately Held Shares

You can gift shares from your privately-held company.

A donation receipt for the appraised fair market value of the shares is issued at the time of the gift, provided the donor is at arm's length from the University of Alberta.

There are many steps involved in donating gifts of privately held shares. Donors are encouraged to contact the University of Alberta Office of Planned Giving and their financial advisors to decide the best course of action.

Example (for illustrative purposes representing a donor residing in Alberta)

John Albertson, '88 MBA, wishes to donate $1,500,000 of private shares with a cost base of zero, to create the John Albertson Visiting Professorship in the Alberta School of Business, which will focus on entrepreneurship and family business.

By making this gift, Mr. Albertson will

• Receive a charitable tax receipt for $1,500,000
• Receive a tax credit that will help offset the capital gains on the appreciated shares