What are the advantages of “planned giving”?
Planned gifts are a popular method of giving because they can provide tax benefits and sources of income. The advantages of planned giving include being able to make a larger charitable gift than you thought possible; a reasonable and reliable rate of return on low-yielding assets; minimizing capital gains tax; an immediate charitable income tax deduction; removal of assets from an estate and tax savings for heirs; continual personal use of an asset with promise for a future gift; and enhance value to assets other than cash when gifts are funded by appreciated securities, real estate, closely held stock, or life insurance.
Planned giving allows you to take advantage of tax savings during your lifetime and can also benefit your estate. There are some very interesting tax advantages associated with this type of contribution: • A 15.25% federal tax credit applies to the first $200 of any contribution and 29% to any amount beyond this. • You can also receive a provincial tax credit of up to almost 50%, depending upon the province in which you reside. For example, the provincial tax credit in Quebec is 20% on the first $200 and 24% on amounts beyond this. • What’s more, an individual Canadian can claim federal tax credits for donations of up to 75% of his or her net income in any given year. • In addition, a donor’s estate can benefit from federal tax credits for charitable donations of up to 100% of his or her net income in the year of death, and in the year immediately preceding the donor’s demise.
