Donating Securities vs. Cash
For many Canadian donors, contributing appreciated publicly traded securities directly to a registered charity can be significantly more tax-efficient than selling the position and donating the after-tax cash proceeds.
The Canadian Tax Mechanism
Under the Income Tax Act (Canada), when you donate listed securities (publicly traded shares, bonds, or mutual fund units) in kind to a qualified donee such as a CRA-registered charity, the capital gains inclusion rate on those securities is reduced to zero. You pay no capital gains tax on the appreciated value, and you may still claim a charitable donation tax credit based on the fair market value at the time of transfer.
By contrast, if you sell appreciated securities first and donate the cash, you trigger a taxable capital gain. Only the after-tax proceeds are available to donate — resulting in a smaller gift and a smaller donation receipt.
Tax Tip: 0% Capital Gains Inclusion on In-Kind Gifts
The elimination of capital gains tax applies to gifts of publicly traded securities made directly to qualified donees. Combined with federal and provincial donation tax credits on the full fair market value, in-kind security donations are one of the most tax-efficient giving strategies available to Canadian donors.
Side-by-Side Comparison
Consider a donor holding publicly traded securities with a fair market value of $50,000 and an adjusted cost base (ACB) of $20,000 — an unrealized capital gain of $30,000. The examples below assume a 50% combined marginal tax rate for illustration.
Sell Stocks, Then Donate Cash
- Fair market value of securities
- $50,000
- Adjusted cost base (ACB)
- $20,000
- Capital gain on sale
- $30,000
- Taxable capital gain (50% inclusion)
- $15,000
- Estimated capital gains tax (~50% rate)
- −$7,500
- Net cash available to donate
- $42,500
- Official donation receipt
- $42,500
Transfer Securities Directly to Altruly
- Fair market value transferred in kind
- $50,000
- Adjusted cost base (ACB)
- $20,000
- Capital gain on donated securities
- $30,000
- Capital gains inclusion rate
- 0%
- Capital gains tax owing
- $0
- Value transferred to your DAF
- $50,000
- Official donation receipt
- $50,000
Net Advantage of In-Kind Transfer
By transferring securities directly instead of selling first, this donor eliminates $7,500 in capital gains tax and increases the charitable donation receipt by the same amount — directing more value to charity at a lower after-tax cost.
Key Takeaways
- Donating appreciated publicly traded securities in kind eliminates capital gains tax entirely under Canadian law.
- Your official donation receipt is based on the fair market value at transfer — not the after-tax sale proceeds.
- Securities transferred to an Altruly DAF account are receipted immediately; you can then recommend grants on your own timeline.
- Actual tax savings depend on your province of residence, marginal tax rate, and the nature of the securities donated. Consult your tax advisor.
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