By C. Yvonne Chenier Q.C.
Santa considers himself to be a Canadian resident for income tax purposes. He grumbles and files his income tax return like everybody else. One of his new elves used to be an accountant who left it all behind to be an elf. He has looked at Santa’s income tax returns for the past few years and tells Santa that he is missing out on some key tax credits. Santa should take the time to consider some charitable donations.
Santa says he never has time to analyze the situation because December is, after all, his busiest time of the year. After he flies around the world on December 24th delivering gifts to all the good little girls and boys he wants to sit back and put his feet up. The last thing he wants to think about is tax stuff. Never mind, his elf the former accountant tells him, a solution is on the horizon. There is a bill moving through the Canadian Parliament that, if passed, would change the tax deadline for charitable giving to the last day in February. “Halleluiah” Santa says. That would be a much quieter time for him when he can actually think about these things.
Santa decides to take a few minutes out of his busy December schedule and spend some time on the CRA website: Giving to charity: Information for donors (http://www.cra-arc.gc.ca/chrts-gvng/dnrs/menu-eng.html). He finds lots of information and a nifty charitable donation tax credit estimator that shows how much he could get as tax credit. Santa wants to see what gifts he could make immediately this year to reduce his tax liability. He does not have much time.
Gift of Cash
Santa checks his wallet and realizes that he does not have much cash these days. He runs a tight empire and all his worth is tied up in gifts he has received from others, investments that he has bought over the years and his private holdings including everything at the North Pole. A cash donation is out of the question.
Santa remembers that big box he has somewhere stuffed with gift certificates and gift cards he has received over the years from kind people giving him presents instead of cookies and milk. Surely they are as good as cash and some charity could make use of them. But when Santa spends a minute looking at the Donation of Gift Certificates or Gift Cards Guidance on the CRA website he decides it is too complicated and decides to leaves the box in the closet until he can consult his adviser to see if he will actually be able to donate and get a tax receipt for the contents of that box.
Gifts of Publicly Traded Securities
Santa has never made a bad investment because, as he is so fond of saying, he sees all the trends on consumer goods, long before the companies themselves realize what a hot commodity they have. The children of this world who want something are the best stock predictors of all. His portfolio consists of shares of Apple and other similar companies that he bought years ago. Some of these have appreciated quite nicely over the years. Santa does not want to sell them because he does not want to incur huge capital gains and pay the tax. He has enjoyed owning these shares and following their ascension but now feels he will get such joy by giving away theses securities while he and Mrs. Clause are still living.
Santa can tell this is a great way to make a gift to charity, because not only will he save himself the expense and hassle of selling the stock himself and pay paying commission, he will not pay any capital gains tax on the gain he has enjoyed. Plus he will still get a tax receipt for the market value the day the stock is received into the charity’s brokerage account. Santa sees there is a bit of paperwork to complete and reminds himself that this is not something he should wait for the last minute to do!
Santa also has personal-use property (such as prints, etchings, drawings, paintings, sculptures, jewellery, rare folios, rare manuscripts, rare books, stamps, and coins); and inventory (such as excess toys that the elves have made) . He wonders if any charity one would accept his old sleighs and how much of tax receipt he would get. The CRA Gifts out of Inventory and Gifts in Kind guidance documents seem way too complicated for Santa to quickly understand.
Santa knows he has to spend more time looking at this and decides to put his long term charitable gift planning off until next year. He and Mrs. Claus are getting ready to retire anyway. He is tired and wants to move to a warm place. But because his assets have resulted from the goodwill of those who believe in him he wants to give back. He quickly sees that on the horizon he has many more options. A few he makes notes about to get more advice about:
· Gifts of Life Insurance – Mrs. Claus had bought life policies on Santa while he was flying around in that sleigh but when he retires these policies will not be needed
· Trust Gifts – everything located at the North Pole and the house he wants to continue living in, and perhaps even a house in Florida or Arizona, could be put into a trust that he and Mrs. Claus could keep a life interest in and he could leave a gift of its residual interest to a charity
Gifts of Annuities – all he and Mrs. Claus really need is an income stream during their life time as they have no heirs and this is a way he could give while securing an income stream for life
· Gifts of RRSPs,RRIFs,TFSAs Santa sees that this may give him and Mrs. Clause a choice of benefitting CRA or a charity.
· Gift of ecologically sensitive land – would the North Pole qualify?
· Gifts of certified cultural property – he has collected many artifacts over the years
· Gifts of Private Company Shares – how about his shares in Santa Inc?
· Santa’s will – Santa has many choices for effective estate planning and the clauses in his will need carful thought to achieve his philanthropic goals.
He decides he will spend much more time getting advice on this in the future. He knows who has been good or bad and keeps his own naughty or nice list. He wonders if the CRA charities Directorate keeps a list of naughty and nice charities, and thinks they probably do. In the meantime Santa starts looking for a charity or charities who would take his Apple shares quickly and efficiently so he could get on with his December tasks. He searches the internet for a charity with a gift acceptance policy that would accept these types of gifts. He is surprised that many of the organizations he might have thought of do not have a published gift acceptance policy. He googles “Canadian charity gift acceptance policy” and the one at the top of the search list is the Canadian Women’s Foundation. What better organization to give a big gift to in 2012! Canada’s only national public foundation dedicated to improving the lives of women and girls. Santa secretly smiles. Santa has always had a soft spot for the girls.