The following illustrated example compares the potential advantage of donating cash directly versus donating flow-through shares. This example assumes that the fair market value of the donation is the same as the original investment, and the tax rates used are the top marginal rates in Alberta. Tax figures are estimates and will vary from individual to individual and province to province.

An Alberta donor invests $100,000 in flow-through shares, receives a tax deduction for the amount invested, and then donates the shares to a registered charity for the fair market value of $100,000. The donor will receive a tax savings of $39,000 from deducting the original investment, a donation tax credit of $41,750, and exemption from the capital gains tax (normally 50 per cent of the market value) if the shares are donated as a gift of securities. The net cost of the gift will be $19,250 versus $58,250 if made as a cash gift.