New federal rules allow donors to give stock without tax
Dorothy McRobb says she’s been making more money in the stock market since she retired than she ever did while she was working. And now, at age 75, she wants to give most of it away. Thanks to a recent change in federal tax rules, her money will go significantly further.
In May, the federal government announced the elimination of the capital gains tax on donations of publicly traded securities. Under the previous regime, a donor who had purchased shares worth $2,000 and donated them when they reached $10,000 would have been required to pay $920 in capital gains tax.
With this new measure, the donor doesn’t pay any tax on the gain, and still receives a donation receipt for $10,000. Tax experts predict donations of securities to charities could rise as much as 50 per cent a year as a result of the measure. “People should know how beneficial this is,” says McRobb. “When you die, your capital gains are taxed at 50 per cent. It can be quite a blow to your estate. You can give this money away now.” McRobb earned a certificate in institutional management in 1952 and a BA in 1972 from U of T while attending Woodsworth College. She recently donated shares worth $70,000 to support the Dorothy Helen McRobb Scholarship, an endowment that will provide one or more awards annually to Woodsworth students.
A former vice-chair of the Ontario Municipal Board, McRobb retired in 1991, and hired a broker to make investments for her. When he lost $15,000 in four months, she took matters into her own hands. She adhered to the philosophy of renowned investor Warren Buffett to pick well-run companies and stick with them. The approach worked well, and she hopes the money will now help students make their own wise choices. “Education is very important,” she says.