2016 Federal Budget Reverses Proposals Regarding Donations of Private Corporation Shares or Real Estate

Authors: Garnet Matsuba, Penny Garnsworthy

This post was written prior to our January 2017 merger, under our previous firm name, MacPherson Leslie & Tyerman LLP.

We noted in an earlier post (October 5, 2015) that the Conservatives’ 2015 Federal Budget proposed to make capital gains arising from the disposition of private corporation shares or real estate exempt from tax when the cash proceeds were donated to a qualified donee within 30 days of the disposition. However, in the March 22, 2016 Federal Budget, introduced by the new Liberal government, the government advised that it does not intend to proceed with this measure.

Therefore, when private corporation shares or real estate are donated to a registered Canadian charity (or other qualified donee), they are considered to be disposed of at fair market value. Generally, 50% of the capital gain that arises on this disposition is subject to tax and must be reported on the donor’s income tax return.