CMGH Foundation

Tax Free Savings Accounts (TFSA's) are the current buzzword in financial circles but do they have a place in Philanthropy?

Lately, the news has been full of stories about Tax Free Savings Accounts (TFSA's), or "tiff-sah's", creating some confusion for the public. The coverage highlights the importance of getting the best possible financial advice and talking to your advisors about what is best for your unique situation.

The concept of utilizing Tax Free Savings Accounts (TFSA's) to fulfill philanthropic or charitable goals has recently come to light and offers an interesting concept for supporters of the Collingwood General & Marine Hospital Foundation to consider.

"In very basic terms, any Canadian resident, age 18 years and older who files a Canadian income tax return, is eligible to contribute a maximum of $5,000 per year to a TFSA. Contributions are not tax-deductible; however Canadian taxpayers can invest and withdraw on a tax-free basis. This type of savings vehicle offers several benefits to donors and investors alike. For example, the flexibility of a TFSA allows an individual to open more than one TFSA account, as long as the contribution limit for that individual is not exceeded. In the case of charitable contributions, a "Charity" account can be set up naming your favourite charity as the beneficiary. Upon the death of the donor, the account proceeds can flow directly to the beneficiary charity thereby avoiding probate in Ontario and taking full advantage of the donation tax credit in the terminal return or year prior to death," says Carol Bezaire, Vice President of Tax and Estate Planning at Mackenzie Financial.

To further illustrate this point we offer the following example:

John's TFSA has accumulated $5,000 in the past two years and he plans on adding to it each year. John is a long time donor to the Collingwood G&M Hospital and wants to leave a legacy gift. He named the G&M as the beneficiary of the TFSA. John is comforted to know that the Hospital would receive a minimum $5,000 gift, it would pass outside of his estate (i.e. no probate fees would accrue) and his estate would receive a tax credit of $1971.78. John's $5,000 gift to the G&M actually has a net cost of $3028.22. Because John wants to ensure the G&M has the equipment it needs to take care of his friends and family, this type of account was a great way to make that happen. John's goal is to build up a generous gift in his TFSA, utilizing a tax effective strategy that works for him and his charity of choice, the G&M Hospital.

This is an illustration of creative philanthropy which fulfills the desire to make a charitable donation in a very cost effective way. Talk to your professional advisors to come up with your own scenario and let the Collingwood G&M Hospital Foundation make your philanthropic dreams come true. To find out more about your community Hospital or how to create a legacy gift through your TFSA, call the G&M Hospital Foundation at 705.444.8645 or visit our website at www.cgmhf.com

Courtesy of:
"Your Guide to Charitable Giving & Estate Planning",

April 2010 by Carol Bezaire, PFPC, TEP, CLU. Vice President of Tax and Estate Planning at Mackenzie Financial. www.mackenziefinancial.com To see an interview with Carol Bezaire click here.

For information on Tax Free Savings Accounts visit www.tfsa.gc.ca