Charitable Annuity Trusts
A Charitable Gift-Plus Annuity allows a donor to make a gift to support the Ontario SPCA while at the same time receiving a guaranteed predetermined income for life.Income from a charitable gift annuity can have tax advantages.It is an ideal choice if the donor is concerned about the amount of tax that he or she is now paying on their interest-bearing investments. Annuities are high quality, guaranteed investments that provide regular payments to the donor and/or their spouse.
Benefits of Charitable Gift-Plus Annuities
- High Return – A charitable gift-plus annuity can provide the donor with a higher rate of return than those available on similar investments such as guaranteed investment certificates or Canada Savings Bonds.
- Tax-Free Income – Each payment is a blend of capital and interest - the capital portion of the donor’s payment is non-taxable.The blend is structured so the donor pays very little tax.
- Insured – The Canadian Life and Health Compensation Corporation insures the donor’s payments, which guarantees annuity payments up to $2,000/month in the event of an insurance company failure.
- Worry free – The donor is free from investment management concerns.
- Flexible – The donor can purchase an annuity now and defer the payments to a later date.
- Convenient – The donor can choose the payment structure that suits them - monthly, quarterly, annually and their payment can be deposited directly into their bank account.
- Tailored – The Ontario SPCA works with financial advisors to explore the variety of options available in the marketplace and ensure that the donor’s gift is set up to meet their needs.
- Reputable – After the details of the annuity have been decided, the Ontario SPCA purchases the charitable annuity from a reputable commercial institution on the donor’s behalf.
- Immediate Gift – A gift-plus annuity enables the donor to give a lump sum to the Ontario SPCA for immediate use.
- Recognition – The donor’s gift can be honoured during their lifetime.
How does it work?
A charitable gift annuity is a contractual arrangement with a commercial annuity provider. The Ontario SPCA works with financial advisors to explore the variety of options available in the marketplace. The following information about the donor is required to obtain quotations – age, the annual payment amount the donor would like to achieve from the annuity and the lump sum the donor wishes to transfer.
The quotations from the top annuity providers (life insurance companies) are received and forwarded to the donor. Once the details of the annuity have been decided, the donor transfers the lump sum to the Ontario SPCA. The Ontario SPCA then purchases a prescribed annuity from a reputable commercial institution on the donor’s behalf.; Cash in excess of the amount required for purchase of the commercial annuity is retained by Ontario SPCA (usually a minimum of 20%) and used for charitable purposes. Annuity payments are then made directly to the donor.
Please Seek Expert Advice: The Ontario SPCA strongly recommends that the donor seek professional advice to ensure their financial goals are considered, their tax situation reviewed, and their planned gift is tailored to their personal circumstances.