Donating Appreciated Securities: The 0% Inclusion Advantage

When you donate publicly traded securities directly to a registered Canadian charity, the capital gains inclusion rate drops to 0%. This means:

• You owe no capital gains tax on the appreciation — zero
• You receive a donation tax credit based on the full FMV of the securities
• The charity receives the full value without any tax drag

Compare this to selling and donating cash:

The 0% inclusion rate applies to:

• Publicly traded securities listed on a designated stock exchange (TSX, NYSE, NASDAQ, London, etc.)
• Mutual fund units and segregated fund policies
• Prescribed debt obligations (certain bonds)
• Ecologically sensitive land donated to a government or qualifying environmental charity

Does NOT qualify:

• Private company shares (must be publicly traded)
• Real estate (unless ecologically sensitive land)
• Cryptocurrency (not considered "listed securities" for this purpose)
• Securities held for fewer than a certain period (generally no holding period requirement for public shares)

1. Identify the charity's brokerage account — call the charity and ask for their DTC participant number or brokerage transfer instructions
2. Instruct your broker to transfer the shares in-kind to the charity's account — do NOT sell first
3. The charity sells the shares after receiving them (their gain is exempt as a charity)
4. Receive a tax receipt — the charity issues a donation receipt for the FMV on the transfer date
5. Claim the credit on your tax return (line 34900 for federal; provincial credit varies)

Critical: If you sell first and donate cash, you lose the 0% inclusion benefit. The shares must transfer directly to the charity without being sold in your account first.

The ideal donation candidates have:

• Large unrealized gains — the bigger the gain, the more tax you avoid
• Low ACB relative to FMV — stocks bought years ago that have appreciated significantly
• Positions you'd sell anyway — if you want to rebalance, donate instead of selling

Best strategy: Donate your most appreciated holdings and buy back a similar position (there's no superficial loss rule for gains — buying back immediately is fine). You reset your ACB to the current market price without ever paying tax on the old gain.

• You can claim donation credits up to 75% of your net income in a given year
• Unused credits carry forward for up to 5 years
• In the year of death (and the preceding year), the limit rises to 100% of net income
• For capital property donations, an additional limit of 25% of taxable capital gains can be claimed

For very large donations, spreading over 2 tax years may be optimal to stay within the 75% limit each year.

Our donate securities calculator shows:

• The tax savings of donating in-kind vs. selling and donating cash
• Your donation tax credit amount
• The net cost of the donation after all tax benefits
• How much more the charity receives with the in-kind approach