ARCHIVED – Capital gains and donations - exchangeable securities
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ARCHIVED – Capital gains and donations - exchangeable securities
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Notice to the reader
This measure has received Royal Assent.
The following questions and answers are based on proposed measures announced in the 2008 budget on February 26, 2008, but that have not yet been enacted by Parliament.
The CRA will continue to communicate tax changes through its Web site, its forms and publications, its phone enquiries services and other communication channels, as the information becomes available.
In the meantime, consult the Web site of the Department of Finance Canada to find out more.
- What is the current tax treatment for donations of publicly traded securities?
- How does the 2008 budget announcement affect the tax treatment for the donation of traded securities?
- How does the 2008 budget announcement affect the tax treatment of exchanges of securities that are partnership interests?
- When do the changes announced in the 2008 budget take effect?
- Where can I get more information on the proposed income tax changes that affect individuals?
Q.1 What is the current tax treatment for donations of publicly traded securities?
A.1 Generally, when publicly traded securities are donated to registered charities or other qualified donee, the capital gain is exempt from tax.
Q.2 How does the 2008 budget announcement affect the tax treatment for the donation of traded securities?
A.2 For donations made after February 25, 2008, the budget proposes to extend the current tax treatment to capital gains on the exchange of unlisted securities (other than prescribed interests in a partnership) for publicly traded securities, where:
- at the time they were issued, the unlisted securities included a condition allowing the holder to exchange them for the publicly traded securities;
- the publicly traded securities are the only consideration received on the exchange; and
- the publicly traded securities are donated within 30 days of the exchange.
Q.3 How does the 2008 budget announcement affect the tax treatment of exchanges of securities that are partnership interests?
A.3 The budget proposes that, where the exchanged securities are partnership interests, the portion of capital gains arising because of reductions to the adjusted cost base would not be exempted. In general, the taxable capital gain would be the lesser of:
- the taxable capital gain otherwise determined; and
- one-half of the amount, if any, by which the cost to the donor of the exchanged units exceeds the adjusted cost base of those interests (determined without reference to distributions of partnership capital).
Q.4 When do the changes announced in the 2008 budget take effect?
A.4 The changes announced in the 2008 budget are proposed to apply to donations made after February 25, 2008.
Q.5 Where can I get more information on the proposed income tax changes that affect individuals?
A.5 The CRA is committed to providing taxpayers with up-to-date information. Taxpayers are encouraged to check our Web site often—all new forms, policies, and guidelines will be posted here as they become available.
In the meantime, please consult the Department of Finance's Budget 2008 documents for details.
- Date modified:
- 2015-07-15