More Estate Related Budget News
In addition to establishing the registered disability savings plan, the 2007 federal budget also provides the estate planner with even greater latitude in planning his or her estate.
The proposed budget eliminates capital gains tax on publicly traded shares that are donated to private foundations.
Previously, the capital gains tax was eliminated on publicly traded shares donated to public foundations or charities. This proposal, therefore, broadens the range of recipients of such a donation, which will presumably encourage more giving.
In conjunction with the changes to tax treatment, there are a number of “excess business holdings rules” that attempt to prevent private foundations from being misused by individuals who have extensive holdings in a corporation and who also have influence over the management of a foundation that also holds shares in the same corporation.
The Government indicates that the change in 2006 led to donations of publicly-traded shares to public foundations of $300m since the 2006 budget was passed. We will have to wait and see if the extension of preferable tax treatment to private foundations will have a similar effect. The BMO Financial Group has stated that the change “will likely generate very substantial donations to private foundations and, consequently, to charities”.
We will also have to wait and see if the rules implemented prevent abuses.
Thank you.
Paul Trudelle
The proposed budget eliminates capital gains tax on publicly traded shares that are donated to private foundations.
Previously, the capital gains tax was eliminated on publicly traded shares donated to public foundations or charities. This proposal, therefore, broadens the range of recipients of such a donation, which will presumably encourage more giving.
In conjunction with the changes to tax treatment, there are a number of “excess business holdings rules” that attempt to prevent private foundations from being misused by individuals who have extensive holdings in a corporation and who also have influence over the management of a foundation that also holds shares in the same corporation.
The Government indicates that the change in 2006 led to donations of publicly-traded shares to public foundations of $300m since the 2006 budget was passed. We will have to wait and see if the extension of preferable tax treatment to private foundations will have a similar effect. The BMO Financial Group has stated that the change “will likely generate very substantial donations to private foundations and, consequently, to charities”.
We will also have to wait and see if the rules implemented prevent abuses.
Thank you.
Paul Trudelle
