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Charitable Giving
Do you or someone you know have newly found shares or cash as a result of a life insurance company demutualizing?

If the answer to this question is yes, you may want to call us or your tax consultant. Anyone who has received shares in a newly formed (now listed on the stock exchange) life insurer should understand how taxation affects your newfound wealth. Once you cash in your shares, the Canada Customs and Revenue Agency will assess tax on 75% of the full amount of proceeds. This classification of taxation is considered a capital gains tax. If you don't cash in your shares, at the time of your death the Canada Customs and Revenue Agency will deem your shares to be sold for their fair market value: what the shares were worth on the day before your death.

Donating Your Shares Makes Good Sense
If you are married, the shares can be rolled over to you spouse, free of tax. The tax bill will then become due at the death of your spouse. If you received cash in lieu of shares, you will receive a tax receipt from the insurer classifying the amount of cash received as a dividend received for tax purposes. The resulting increased income could result in a higher tax bracket for the recipient and could increase the old age security clawback, thus reducing overall income for the next year. Philanthropic individuals may consider donating the shares they have received to their favourite charities. Donating shares of publicly traded Canadian companies has a significant tax advantage. Call us or your professional tax consultant for more information.

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Sirius Financial Services, 334 MacLaren Street, Suite 101, Ottawa  ON  K2P 0M6
Telephone: (613) 231-8603  |  Fax: (613) 231-8607