ARTICLES  &  REVIEWS

Introducing the New Philanthropist.

 

As governments cut back social programs, we need to consider our role in improving our city, country and world. If we desire a higher quality of life for our children and grandchildren, it will not be found in perpetuating the welfare state or holding ourselves in gated communities with surveillance cameras and guard dogs.

We need to realize that a dollar spent by the government on social programs is not administered as well as a dollar spent locally by a community organization.

This realization opens up the opportunity for each of us to become a great philanthropist, someone who seeks to improve the quality of life and collectively enrich the lives of those around us.

The question is, how we can create value in our community using our time and our money?

If our tax system slowly starts to reduce taxes, we need to rise to the occasion and use deductible dollars to make our communities healthy. If we can move dollars to new and existing charitable organizations, rather than send tax dollars to Ottawa, we can affect change in our local communities, shrink government bureaucracy and create tremendous meaning for our money and our lives.

This notion isn’t just an idea for the Super Rich.

The new philanthropist is in each of us. Each of us can be committed to creating value for others, giving a portion of time and money back to our community and acting out a life of meaning and purpose.

 

Leave a legacy to those you love.

In addition to giving charitably out of our income, there is a tremendous opportunity to also "leave a legacy.”

For example, on the death of both the husband and wife, all the property is deemed to have been sold and disposed of. At this time, the RSP or RIF becomes fully taxable to the estate and all capital gains are deemed to be realized. Taxes of 46 percent are due on RSPs and approximately 23 percent on capital gains.

New legislation ensures that gifts at death left to charity are 100-percent deductible to the estate. That means everyone has the ability to leave a tax-free gift rather than a tax bill.

Many who cannot afford to give up capital during their life should certainly consider leaving a gift to their favourite charity rather than to the government. Millions of dollars come to charities through Will bequests. Charitable giving at death is very powerful when a 100 percent deduction is allowed.

Giving is as easy as pie.

Think of a pie. if you leave all of your RSP and capital gains to your estate or family, almost half of the pie will go to the government. Here’s how a charitable giving strategy can work:

 

• Leave a large portion of your estate to a charity.
• Receive a 100-percent tax deduction.
• Transfer one to three percent of your savings into a “tax sheltered estate bond”.

 

This way, you can leave the government out of your estate plan and give the whole pie to the people and causes you love.

For example, Bob and Carol are in their late 60s and have $600,000 in their RRIF funds. If they do nothing, at the second death of Bob and Carol, the $600,000 of RRIF capital will be fully taxable to the last survivors. That’s approximately $300,000 payable to Revenue Canada and the remaining $300,000 to be divided between their two children.

If Bob and Carol consider leaving the $600,000 RRIF to their favourite registered charity through their Will and provide $8,000 a year to fund a “tax sheltered estate bond”, the result would be $600,000 tax free to their favourite charity and $600,000 tax free to their children. 

The income tax act was tilted to reward those who desire to become great philanthropists and leave a legacy. Isn’t it time we moved from people seeking success towards becoming people of significance?