Donating Capital Property
Reduce capital gains taxes by donating capital property
Capital gains taxes can be eliminated by donating certain types of capital property (qualified investments, prescribed debt obligations, or ecologically sensitive land) to qualified donees (see the CRA definition for a qualified donee). The donation of capital property is treated as a disposal of that property. The taxable capital gain is eliminated for this type of donation made after May 1, 2006. For donations made before May 2, 2006, the taxable capital gain is 25% instead of 50%.
If anything was received (compensation or other benefits) in return for the donation (e.g., tickets, meals), then see the CRA topic "capital gains realized on certain capital property", in the publication P113 Gifts and Income Tax.
Another benefit of donating capital property is that your total donations limit will be increased by 25% of the taxable capital gain on gifts donated, up to a maximum total limit of 100% of net income. See the CRA topic "calculating your increased donations limit" in the publication P113 Gifts and Income Tax.
CRA has the following information on their site regarding donating capital property:
- P113 Gifts and Income Tax
- Calculating your capital gain or loss in T4037 Capital gains guide
- Form T1170 Capital gains on gifts of certain taxable property