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Donating Low Value Shareholdings to Charity to Make a Difference

By: Emma Comyn | Posted on: 17 Dec 2019

Donating Low Value Shareholdings to Charity to Make a Difference

Due to the economic downturn of the previous decade the value of many stocks, once regarded as popular reliable investments, plummeted never to return to any significant value. These low value shareholdings in many cases may be more expensive to sell than the value of the shareholding itself. This is a relatively common occurrence in estate distribution of recent times.

These low value shareholdings often leave executors with a dilemma, not transferring or selling the shares would leave an undistributed part of the estate but distributing this shareholding will be costly to the estate.

ShareGift has developed a charitable solution to this dilemma. ShareGift is a charitable share giving service now being used by many Stock Transfer Companies, including Computershare, and publicly traded companies such as Verizon, Vodafone, AIB Group and Bank of Ireland.

ShareGift, of course, also accept donations, of low and high value shareholdings, from living donors. Donations of shares to charity may have preferential tax benefits for the donor, this is discussed further below.

 

HOW DOES THE PROCESS WORK?

ShareGift is a registered charity. The shares are registered in the name of ShareGift and placed within their portfolio of shares. Shares are aggregated within the portfolio until enough of anyone holding is accumulated to sell. In the meantime, shareholdings may attract dividends or capital payments, and all of this helps create a pool of funds.

Stock Transfer Companies and publicly traded companies currently working with ShareGift have drafted convenient forms to enable the smooth transfer of shareholdings. If the company the stocks are held in is not affiliated to ShareGift shares can be transferred in the normal course to ShareGift as if they were any other new shareholder.

 

WHO BENEFITS FROM THE DONATED SHARES?

In Ireland charities such as Irish Cancer Society, Barretstown, Focus Ireland, Youth Work Ireland, Irish Cancer Society, Special Olympics Ireland and Laura Lynn Children's Hospice are among a number of charities that are supported by ShareGift. In the U.K. ShareGift supports more than 2,885 charities.

 

WHAT ARE THE TAX CONSEQUENCES?

As charitable legacies are not subject to Capital Acquisitions Tax (the tax payable on gifts and inheritances), as regulated by the Charities Regulator, this will also apply to shares donated to charity.

If a living donor decides to donate a shareholding to a charitable organisation the provisions of s. 848A of the Taxes Consolidation Act 1997 (Number 39 of 1997) will apply. An individual may engage in tax-efficient giving of a sum more than €250 but less than €1m to an “approved charity” annually, however, if a person is connected to a charity this is limited to 10% of their annual income. This relief comes in the form of income tax relief for cash-based gifts; lump sum donations and regularly debited payments both qualify for this relief.

However, if a gift is that of shares the donor can choose which tax relief they would like to avail of, income tax relief or Capital Gains Tax (CGT) relief. The benefit is assessed by Revenue as the market value of the shares at the time of the donation.

 

Visit the Charitable Donation Scheme on Revenue.ie.

 

Emma Comyn is a Partner in Comyn Kelleher Tobin’s conveyancing team. She also specialises in the area of Probate, regularly drafting wills and providing practical advice on legal and financial issues. 

This article was quoted in the Irish Examiner on 17th December 2019, view article here

This information is for general guidance and it is not intended to be professional legal advice. For further information, contact a member of the Probate team.

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