Giving to Charity by way of Flow-Through Shares
Charitable giving is becoming more popular in Canada as recent ammendments to the Income Tax Act have eliminated capital gains tax entirely on donations of certain securities to a registered charity, (including, as of December 14, 2007, a private charitable foundation). While a share in the capital stock of a mutual fund corporation will qualify for such treatment, a unit of a limited partnership will not.
Charitable Donations should be limited to 75% of net income, in any given year. Amounts granted in excess are not deductible in the year of donation and are carried forward for up to 5 years.
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The tax savings above are calculated by multiplying the total estimated income tax deductions for each year by the assumed highest marginal tax rate for that year. This illustration assumes that the subscriber has sufficient income so that the illustrated tax savings are realized in the year shown.
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Assumes charitable donation amount is equal to the original investment amount.
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Estimate for illustrative purposes only.
Each Jov Flow-Through Limited Partnership(s) intends to implement a transaction to improve liquidity and the potential for long-term growth of capital and income. This implementation involves an exchange transaction, pursuant to which the Partnership will transfer its assets to a Mutual Fund on a tax-deferred basis in exchange for redeemable securities of a Mutual Fund. Within 60 days thereafter, the Mutual Fund shares will be distributed to the Limited Partners, pro rata, on a tax-deferred basis, and the Partnership will be dissolved. There can be no assurance that any such liquidity event will be proposed, approved or implemented.
