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Last chance to donate for 2010!
Before you pop the bubbly, don't forget to make your 2010 donations! Remember, you can donate until 11:59pm (Eastern Time) through CanadaHelps today and still get a 2010 tax receipt.
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About me: I give Economic, Social and Global trend briefings from some of the world's brightest minds at my blog http://saveriomanzo.com/ and http://saveriomanzo.blogspot.com/. I also provide true and tested financial planning and wealth advice. Most recently, over the past few years, I have become socially conscious and have been attempting to practise ways in which I can live my life more environmentally friendly. Along with some truly exceptional friends, we provide consulting and business development for small-medium sized businesses. In addition, I truly believe in being philanthropic, giving and doing unto other as we would have them do unto us. Some of my fondest resources are from Barry Ritholtz of The Big Picture, David Rosenberg and what Warren Buffett of Berkshire Hathaway is up to behind the scenes, as an example. saverio manzo
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Friday, December 31, 2010
Wednesday, December 15, 2010
Philanthropy: Year-End notes
Philanthropic activity in Canada is in top gear. As the season for charitable giving draws to an end, with December 31 being the deadline for a 2010 tax receipt, Canadians are looking for ways to keep the tax man’s hand out of their pocket. Charitable giving as a tax-reduction strategy is one of them.
It helps that Canadians are starting to feel a bit more confident about the economy. When they feel good about the economy, and their wealth, they open their wallets, says Jo-Anne Ryan, vice-president, philanthropic advisory services, TD Waterhouse.
“We are seeing gifts of appreciated securities, which certainly provide a lot of benefits when it comes to charitable giving,” says Ryan. She advises investors to give securities with appreciated gains rather than selling the stock and donating cash so as to avoid half of their capital gains being taxed as income.
Those reluctant to donate securities that are expected to continue to grow in value can still have it both ways. “They can donate it, get the tax receipt for the market value, eliminate capital gains and then buy it back immediately to still participate in any upside potential.”
Planning plays a key role in philanthropic giving. However, there seems to be a considerable lack of strategic planning around philanthropy in Canada. Ryan wants to change that. She encourages people to develop a philanthropic plan much the same way they create an estate plan or a financial investment plan.
“A philanthropic plan is done to donate in a way that reflects your values as opposed to just ending up with a pile of tax receipts at the end of the year that represent a mishmash of different causes, but not necessarily values that are important to you.”
One of the biggest trends in charitable giving nowadays is donor advised funds, a simple alternative to establishing a private foundation. The time consuming process of establishing a private foundation also requires the donor to have $1 million or more. By contrast, opening a mini sub-foundation account in a public foundation structure takes minimal paperwork and only requires $10,000 to open.
“When you donate to it, you are building a legacy of giving where the earnings would be paid out to a charity of your choice and you have the flexibility to change those charities from one year to the next.”
This flexibility is particularly beneficial to donors who want to donate now and decide on a recipient later. Ryan says even those who may still be undecided on the charity they want to support can enjoy tax advantages of charitable giving. Donor advised funds provide the flexibility to give now and get the tax savings now, while appointing charitable beneficiaries later. “You can put the amount of your choice into the donor advised fund before the end of the year, but you don’t have to decide until later which charities you want to allocate the fund to.”
Done with the right spirit, right intent and right approach charitable giving is a great investment strategy that is a win-win for donors and charities. Unfortunately, there are “donors” who are abusing this otherwise legitimate avenue to earn tax credit.
The Canada Revenue Agency (CRA) is going after questionable tax shelter programmes that allow people to claim spurious charitable donations. Such schemes typically give the donor a tax receipt far in excess of the cash value of their donation, which allows them to claim a tax refund larger than the actual donation.
Ryan cautions legitimate, well-intentioned donors to be suspicious of programmes that offer tax savings disproportionate to donations. “If you are presented with something where you’re actually going to end up with more money in your pocket as a result of making a charitable donation (and) if it sounds too good to be true, it is.
“There are terrific tax benefits to charitable giving and it’s a great way to reallocate tax savings money to causes you care about, but at the end of the day you will still be out of pocket a little bit.”
As for financial advisors, Ryan said they should make the effort to increase their knowledge in the area of charitable giving as an investment strategy because it is important to their clients. They can make a real contribution by helping their clients help charities and save more tax dollars at the same time.
by Vikram Barhat
About me: I give Economic, Social and Global trend briefings from some of the world's brightest minds at my blog http://saveriomanzo.com/ and http://saveriomanzo.blogspot.com/. I also provide true and tested financial planning and wealth advice. Most recently, over the past few years, I have become socially conscious and have been attempting to practise ways in which I can live my life more environmentally friendly. Along with some truly exceptional friends, we provide consulting and business development for small-medium sized businesses. In addition, I truly believe in being philanthropic, giving and doing unto other as we would have them do unto us. Some of my fondest resources are from Barry Ritholtz of The Big Picture, David Rosenberg and what Warren Buffett of Berkshire Hathaway is up to behind the scenes, as an example.
It helps that Canadians are starting to feel a bit more confident about the economy. When they feel good about the economy, and their wealth, they open their wallets, says Jo-Anne Ryan, vice-president, philanthropic advisory services, TD Waterhouse.
“We are seeing gifts of appreciated securities, which certainly provide a lot of benefits when it comes to charitable giving,” says Ryan. She advises investors to give securities with appreciated gains rather than selling the stock and donating cash so as to avoid half of their capital gains being taxed as income.
Those reluctant to donate securities that are expected to continue to grow in value can still have it both ways. “They can donate it, get the tax receipt for the market value, eliminate capital gains and then buy it back immediately to still participate in any upside potential.”
Planning plays a key role in philanthropic giving. However, there seems to be a considerable lack of strategic planning around philanthropy in Canada. Ryan wants to change that. She encourages people to develop a philanthropic plan much the same way they create an estate plan or a financial investment plan.
“A philanthropic plan is done to donate in a way that reflects your values as opposed to just ending up with a pile of tax receipts at the end of the year that represent a mishmash of different causes, but not necessarily values that are important to you.”
One of the biggest trends in charitable giving nowadays is donor advised funds, a simple alternative to establishing a private foundation. The time consuming process of establishing a private foundation also requires the donor to have $1 million or more. By contrast, opening a mini sub-foundation account in a public foundation structure takes minimal paperwork and only requires $10,000 to open.
“When you donate to it, you are building a legacy of giving where the earnings would be paid out to a charity of your choice and you have the flexibility to change those charities from one year to the next.”
This flexibility is particularly beneficial to donors who want to donate now and decide on a recipient later. Ryan says even those who may still be undecided on the charity they want to support can enjoy tax advantages of charitable giving. Donor advised funds provide the flexibility to give now and get the tax savings now, while appointing charitable beneficiaries later. “You can put the amount of your choice into the donor advised fund before the end of the year, but you don’t have to decide until later which charities you want to allocate the fund to.”
Done with the right spirit, right intent and right approach charitable giving is a great investment strategy that is a win-win for donors and charities. Unfortunately, there are “donors” who are abusing this otherwise legitimate avenue to earn tax credit.
The Canada Revenue Agency (CRA) is going after questionable tax shelter programmes that allow people to claim spurious charitable donations. Such schemes typically give the donor a tax receipt far in excess of the cash value of their donation, which allows them to claim a tax refund larger than the actual donation.
Ryan cautions legitimate, well-intentioned donors to be suspicious of programmes that offer tax savings disproportionate to donations. “If you are presented with something where you’re actually going to end up with more money in your pocket as a result of making a charitable donation (and) if it sounds too good to be true, it is.
“There are terrific tax benefits to charitable giving and it’s a great way to reallocate tax savings money to causes you care about, but at the end of the day you will still be out of pocket a little bit.”
As for financial advisors, Ryan said they should make the effort to increase their knowledge in the area of charitable giving as an investment strategy because it is important to their clients. They can make a real contribution by helping their clients help charities and save more tax dollars at the same time.
by Vikram Barhat
About me: I give Economic, Social and Global trend briefings from some of the world's brightest minds at my blog http://saveriomanzo.com/ and http://saveriomanzo.blogspot.com/. I also provide true and tested financial planning and wealth advice. Most recently, over the past few years, I have become socially conscious and have been attempting to practise ways in which I can live my life more environmentally friendly. Along with some truly exceptional friends, we provide consulting and business development for small-medium sized businesses. In addition, I truly believe in being philanthropic, giving and doing unto other as we would have them do unto us. Some of my fondest resources are from Barry Ritholtz of The Big Picture, David Rosenberg and what Warren Buffett of Berkshire Hathaway is up to behind the scenes, as an example.
Saturday, December 4, 2010
Philanthropy: The gift that gives back
The Fall and Winter are often charitable giving seasons in Canada. It is the time of year that sees a lot of activity around charitable donations from those who are, after having put it off until the last moment, scrambling to meet the December 31 deadline to make charitable donations for the given tax year.
The timing couldn't be better for Jo-Anne Ryan, vice-president, philanthropic advisory services, TD Waterhouse Canada, to examine various philanthropic ways high-net worth (HNW) clients can, and in many cases do, minimize tax implications of their wealth.
"Charitable giving is becoming more and more important with our boomers," said Ryan during a presentation at the Strategy Institute's 12th annual Marketing Wealth Management Services to High Net Worth Individuals Summit. "They are changing the face of philanthropy, just like they are changing everything else."
They look at their charitable donations as an investment. "They look at what types of results (their donations) are going to get them, which can be anything from how many people are going to come off welfare, to how many lives they're going to save."
Philanthropic giving is increasingly important in the financial and estate plans for clients. Boiled down, charitable gift planning is the process of creating a complete and balanced approach to philanthropy that addresses estate, tax and financial planning objectives enriched by personal philanthropic hope and dreams.
Yet until recently, there seemed to be little or no strategy around much of the charitable giving taking place in Canada. By the end of each year, clients could be found saddled with a pile of tax receipts that represented a mishmash of charitable causes not necessarily representing values that are important to them.
Things are getting better, though. Donors are becoming increasingly savvy by learning the importance of strategic philanthropy. "People want to become much more strategic with their philanthropic giving having an impact," said Ryan. "We want to really be working with our clients, understanding those values, helping clients to articulate them, and put a plan in place."
This sort of strategic planning is especially relevant in Canada, one of the most charitable countries, according to the first ever World Giving Index (WGI). Published by UK-based Charities Aid Foundation, the index ranks Canada third — behind Australia and New Zealand — in "global generosity" among 153 countries comprising 95% of the world's population.
There's no denying that tax, although only one of the many motivations for giving, is an important consideration. "Most people want to give it away to maximize the tax benefits (and) give in a very tax effective manner," said Ryan.
In the absence of strategic planning, the client's capital will make its way to the government, which decides how to allocate those dollars. "Of course, charities are a very small proportion as to how those dollars get allocated (by the government)."
With strategic planning in place, however, donors take control of that capital and can direct it to causes in which they most strongly believe, while taking advantage of tax credits.
"It's really redirecting what's already going to the government, to things that are important to you," said Ryan. "Most people would want to minimize what the CRA inherits and maximize what family, friends and charity receive."
Ryan wasn't short on tips on how that can be achieved. The first on the list was donating securities as opposed to making cash donations. "You're always better off giving securities with appreciated gains versus selling the stock and donating cash."
For those who expect further upside from their stock, she recommends they can still donate, eliminate the capital gains, and buy it back immediately. The temptation to market time donations, however, must be resisted at all costs, she said.
Another equity-based idea: donate stock from a holding company. "When you donate from a corporation you get a tax receipt that gives you a deduction (which) reduces income," she said. "You also eliminate the capital gains taxes when you donate a stock from a holding company."
Ryan also offered one of the best kept secrets of charitable giving. "The full capital gain that is eliminated gets credited to the corporation's capital dividend account which allows the shareholder to withdraw money tax-free."
These tax-free withdrawals drive down the value of the corporation, reducing estate taxes, by lowering the value of corporate shares at the time of death, which triggers a deemed disposition.
Charitable giving of employee stock options is another great way to slough off unwelcome taxes. When sold, these generate returns which, despite technically being employment income, are taxed as capital gains. "If you donate the stock within 30 days and in the same calendar year, you can totally eliminate that tax," said Ryan.
Using up tax credits and donating RRIF income to charity are also good ways to minimize what will invariably land in CRA's coffers.
Incorporating philanthropy as part of the overall financial and estate plan is a great way to find the happy balance between what is bequeathed to the next generation and what goes to charity, she said.
(10/29/10)
Filed by Vikram Barhat, Senior Writer, Advisor.ca
About me: I give Economic, Social and Global trend briefings from some of the world's brightest minds at my blog http://saveriomanzo.com/ and http://saveriomanzo.blogspot.com/. I also provide true and tested financial planning and wealth advice. Most recently, over the past few years, I have become socially conscious and have been attempting to practise ways in which I can live my life more environmentally friendly. Along with some truly exceptional friends, we provide consulting and business development for small-medium sized businesses. In addition, I truly believe in being philanthropic, giving and doing unto other as we would have them do unto us. Some of my fondest resources are from Barry Ritholtz of The Big Picture, David Rosenberg and what Warren Buffett of Berkshire Hathaway is up to behind the scenes, as an example.
The timing couldn't be better for Jo-Anne Ryan, vice-president, philanthropic advisory services, TD Waterhouse Canada, to examine various philanthropic ways high-net worth (HNW) clients can, and in many cases do, minimize tax implications of their wealth.
"Charitable giving is becoming more and more important with our boomers," said Ryan during a presentation at the Strategy Institute's 12th annual Marketing Wealth Management Services to High Net Worth Individuals Summit. "They are changing the face of philanthropy, just like they are changing everything else."
They look at their charitable donations as an investment. "They look at what types of results (their donations) are going to get them, which can be anything from how many people are going to come off welfare, to how many lives they're going to save."
Philanthropic giving is increasingly important in the financial and estate plans for clients. Boiled down, charitable gift planning is the process of creating a complete and balanced approach to philanthropy that addresses estate, tax and financial planning objectives enriched by personal philanthropic hope and dreams.
Yet until recently, there seemed to be little or no strategy around much of the charitable giving taking place in Canada. By the end of each year, clients could be found saddled with a pile of tax receipts that represented a mishmash of charitable causes not necessarily representing values that are important to them.
Things are getting better, though. Donors are becoming increasingly savvy by learning the importance of strategic philanthropy. "People want to become much more strategic with their philanthropic giving having an impact," said Ryan. "We want to really be working with our clients, understanding those values, helping clients to articulate them, and put a plan in place."
This sort of strategic planning is especially relevant in Canada, one of the most charitable countries, according to the first ever World Giving Index (WGI). Published by UK-based Charities Aid Foundation, the index ranks Canada third — behind Australia and New Zealand — in "global generosity" among 153 countries comprising 95% of the world's population.
There's no denying that tax, although only one of the many motivations for giving, is an important consideration. "Most people want to give it away to maximize the tax benefits (and) give in a very tax effective manner," said Ryan.
In the absence of strategic planning, the client's capital will make its way to the government, which decides how to allocate those dollars. "Of course, charities are a very small proportion as to how those dollars get allocated (by the government)."
With strategic planning in place, however, donors take control of that capital and can direct it to causes in which they most strongly believe, while taking advantage of tax credits.
"It's really redirecting what's already going to the government, to things that are important to you," said Ryan. "Most people would want to minimize what the CRA inherits and maximize what family, friends and charity receive."
Ryan wasn't short on tips on how that can be achieved. The first on the list was donating securities as opposed to making cash donations. "You're always better off giving securities with appreciated gains versus selling the stock and donating cash."
For those who expect further upside from their stock, she recommends they can still donate, eliminate the capital gains, and buy it back immediately. The temptation to market time donations, however, must be resisted at all costs, she said.
Another equity-based idea: donate stock from a holding company. "When you donate from a corporation you get a tax receipt that gives you a deduction (which) reduces income," she said. "You also eliminate the capital gains taxes when you donate a stock from a holding company."
Ryan also offered one of the best kept secrets of charitable giving. "The full capital gain that is eliminated gets credited to the corporation's capital dividend account which allows the shareholder to withdraw money tax-free."
These tax-free withdrawals drive down the value of the corporation, reducing estate taxes, by lowering the value of corporate shares at the time of death, which triggers a deemed disposition.
Charitable giving of employee stock options is another great way to slough off unwelcome taxes. When sold, these generate returns which, despite technically being employment income, are taxed as capital gains. "If you donate the stock within 30 days and in the same calendar year, you can totally eliminate that tax," said Ryan.
Using up tax credits and donating RRIF income to charity are also good ways to minimize what will invariably land in CRA's coffers.
Incorporating philanthropy as part of the overall financial and estate plan is a great way to find the happy balance between what is bequeathed to the next generation and what goes to charity, she said.
(10/29/10)
Filed by Vikram Barhat, Senior Writer, Advisor.ca
About me: I give Economic, Social and Global trend briefings from some of the world's brightest minds at my blog http://saveriomanzo.com/ and http://saveriomanzo.blogspot.com/. I also provide true and tested financial planning and wealth advice. Most recently, over the past few years, I have become socially conscious and have been attempting to practise ways in which I can live my life more environmentally friendly. Along with some truly exceptional friends, we provide consulting and business development for small-medium sized businesses. In addition, I truly believe in being philanthropic, giving and doing unto other as we would have them do unto us. Some of my fondest resources are from Barry Ritholtz of The Big Picture, David Rosenberg and what Warren Buffett of Berkshire Hathaway is up to behind the scenes, as an example.
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