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Charity case study

Turning a $2M Equity Account into a Powerful Legacy

A successful business owner with a $10 million privately held corporation. Inside the corporation sat a $2 million investment portfolio, with $1.5 million in unrealized capital gains.

The client wanted to support a meaningful cause—but also hoped to reduce tax exposure and protect family wealth.

The Situation

Like many business owners, this client was planning to make a significant charitable donation—initially by selling investments and donating the cash.

But after working together, we proposed a smarter, more strategic path:

  • Donating the securities in-kind, directly from the corporation.

The Strategic Shift

By donating the $2 million in appreciated securities directly, rather than liquidating them, the client unlocked a triple benefit:

1. No Capital Gains Tax

Had the securities been sold, the company would’ve triggered tax on $750,000 of taxable gains (50% of the $1.5M capital gain).

💰 Tax avoided: approx. $200,000–$250,000
✨ By donating the securities in-kind, this business owner saved over $200,000 in taxes—money that now fuels impact instead of going to the CRA.

2. $2 Million Corporate Tax Deduction

The full fair market value of the donation was deductible from corporate income—creating significant tax relief in the year of the gift.

3. $1.5 Million Added to the Capital Dividend Account (CDA)

That $1.5M of capital gain (normally taxable) went into the CDA—allowing the business owner to later extract $1.5 million tax-free from the corporation.

Estate Planning Advantage

Because the shares were not cashed out:
  • The securities were removed from the corporate balance sheet, reducing the value of the estate at death
  • The donation offset future corporate tax liabilities, decreasing what CRA would take
  • The structure helped minimize estate tax exposure and simplified succession for heirs

The Emotional Outcome

This wasn’t just a tax win—it was a mindset shift.
The client said this strategy gave “power and purpose” to their wealth. They could give generously, maximize their impact, and protect their legacy—all without the painful tax hit they expected.
What started as a simple desire to donate became a transformative strategy—one that benefited charity, family, and the future.

📌 Key Results

Action Taxable Gain Tax Deduction CDA Credit Estate Value Impact
Sell & donate cash $750,000 $2M $750,000 Higher estate value
Donate securities in-kind $0 $2M $1.5M Lower estate value

This single donation saved the client over $200,000 in tax—simply by changing how they gave, not how much.

Final Word:

Donating cash is generous.
 Donating appreciated securities strategically?
 That’s generosity with impact.

💬 Curious how this might work for your business? Let’s talk about turning tax into purpose.

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