Planned giving: a brief overview

Are you thinking of making a donation to a cause that's important to you and wondering about the best ways to go about it? In this capsule, we'll take a look at the different types of planned giving you can consider and the tax implications.

What is a planned gift and who is it for?

A planned gift consists of giving, either during your lifetime or at death, a portion of the assets accumulated during your lifetime, taking into account your personal, family and tax situation. Contrary to popular belief, planned giving is for everyone, not just the wealthy.

The types of donations

There are several types of planned gift. These fall into two main categories:

• Immediate gifts

  This category affects only a small proportion of planned gifts and is aimed at those who wish to see the impact of their gift(s) during their lifetime. Examples of outright gifts include:

  • The gift of a sum of money

  • The gift of eligible securities (stocks, bonds and other securities)

  • The gift of real estate and other gifts in kind (cottage, boat, works of art, jewellery, etc.)

  • Giving through life insurance (cash surrender value or CSV)

• Deferred gifts

  Most planned gifts are deferred gifts, meaning they are intended to be made later in time. For example, a person may benefit from assets during his or her lifetime and, upon death, wish to dispose of them in favour of a cause that is dear to him or her. Here are some examples of deferred gifts:

  • The gift in a will (can be the gift of a sum of money, eligible securities, real estate, etc.)

  • The gift of life insurance

  • The charitable annuity

  • The charitable trust

Donations, whether immediate or deferred, often use the same assets. For example, it is possible, either during one's lifetime or on death, to give shares, a sum of money, a property, etc., as a gift.

What about taxation?

Taxation is a very important aspect of individual donations. The provincial and federal governments provide a tax credit for donations. The combined tax credit (federal and provincial) is between 48.2% and 53.3%, depending on the donor's disposable income. In other words, for a high-income individual (over $246,752 in 2024), a $100 donation will entitle the donor to claim a tax credit totalling $53.30.

For a company, the tax advantage corresponds to a deduction in the calculation of taxable income (instead of a tax credit). Thus, the tax saving for a company eligible for the small business deduction (hereafter: SBD) is 12.2%, whereas it is 26.5% for a company not eligible for the SBD. For investment companies, the saving is 50.17%.

The tax impact of donations can be influenced by a number of factors. Here is a list of the main factors:

• Assets held by the individual or held via a company

• The tax rate

• The donor's tax attributes (losses carried forward, RDTOH and CDC in the context of a company)

For more information on planned giving, we recommend that you consult a tax specialist. He or she will be able to maximise the impact of your donation and ensure that there are no unpleasant surprises when you decide to take action.
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