In every edition of Take Root, we answer a question from a donor on anything from leaving a gift in your Will, giving through RRSPs, RRIFs and more! In this edition, Mark Halpern, CEO of WEALTHinsurance.com, shares his expertise.

Q: I’ve heard that the Canadian government has announced plans to raise the Alternative Minimum Tax (AMT) next year. What will this mean for me as a donor?

A: Unfortunately, the proposed changes to the Alternative Minimum Tax would make it less advantageous from a tax perspective for individuals, trusts, and estates with taxable income of $300k and higher to donate non-registered securities such as stocks, mutual funds, and exchange-traded funds.

Right now, if you’re donating stocks, you do not pay any tax on the appreciation and you get a full donation receipt that could be used to offset other sources of income. Under the proposed changes, taking effect January 1, 2024, high net worth donors would pay 30 percent tax on the capital gain and the donation tax credit would be cut in half.

I recommend speaking to your financial advisor about the following: If you’ve been thinking about donating in-kind non-registered public securities, consider making your gift in 2023. There is also an option to pre-fund a private foundation or Donor Advised Fund in 2023. And finally, if you’re planning on selling a business or investment in real estate, doing so in 2023 could help you avoid increased capital gains tax inclusion.

Please note that there is no AMT on death, so charitable tax planning in your Will is key. Donations can be used to mitigate up to 100% of estate taxes including the previous year. That means for every $2 given to charity, you can save $1 of tax and turn it into charity. We have many ways using life insurance to make this a reality for pennies on the dollar or on a cash-flow neutral basis.  It pays to invest a bit of time to see how this can be of benefit for you and your family.

Watch a webinar where two of our experienced Planned Giving Advisory Committee members, Mark Halpern, CEO of WEALTHinsurance, and Alan Naiman, Tax Partner at KPMG, discuss:

– Cost-efficient and tax-effective strategies for giving
– The most important Alternative Minimum Tax (AMT) changes for donors to understand
– And any questions you may have about Planned Giving!

Do you have a question you would like answered by our Planned Giving Advisory Committee? If you’d like to learn more about this type of giving, please contact Caterina Magisano at 416.242.1000 ext. 81516, cmagisano@hrh.ca.

This information does not replace advice from your professional financial advisor. Please contact them with questions about your specific financial plan.