Welcome Tax & Ecology Seminar presented by The Georgian Bay Land Trust
There are significant income and capital gains tax benefits available for Georgian Bay land owners who want to help protect the bay s wilderness.
Is your property part of the 20,000 acres of private Georgian Bay land that are ecologically significant?
If so. There are things you should know
Conservation Context logging circa 1885 G 505 Million ft. cut in 1880 alone
First biological field station on the great lakes GO HOME BAY 1902
1902 Conservation Begins
Eastern Georgian Bay & Watershed A Very Important Place Greatest biodiversity of reptile & amphibian populations in Canada Greatest concentration of coastal habitats in the Great Lakes World s largest archipelago of freshwater islands
Eastern Georgian Bay & Watershed A Very Important Place Coastal length of over 5,300 km (mainland and islands) Highest densities of globally and nationally rare species and vegetation communities in Ontario on the Shield UNESCO Biosphere Reserve Designation
Eastern Georgian Bay & Watershed A Very Important Place Home to more than 1,100 native plant and animal species.
It is a last refuge for 45 species at risk
Seminal Studies on Biodiversity NCC MNR GBLT Eastern Georgian Bay Project 2001-2005 Great Lakes Terrestrial Conservation Blueprint GBLT NCC Natural Area Conservation Plan
Protected Property Size - 2 acres to 500 acres - Sandy & Ingersoll 500 acres
Ways to Protect Habitat Conservation agreements Gifts of land Life-interest
Protecting Habitat is a GIFT Capital Gains Relief Income Tax Relief
Ecological Gifts Program
Conservation Easement You keep ownership 10 Acres
Non-Conservation Easement Portion You retain all building rights etc. 10 Acres
Conservation Easement 85-90% of value of outright gift 10 Acres
Conservation Easement Income Tax Credit Value 85-90% of outright gift 10 Acres
Income Tax Credit carry forward and use for 10 years 10 Acres
Conservation Easement Capital Gains Reduced by 85-90% 10 Acres
Donation of Vacant Land 5 acres
Donation of Vacant Land No Capital Gains 5 acres
Donation of Vacant Land Income tax credit on full value of land 5 acres
Income Tax Credit carry forward for 10 years 5 acres
Case For Conservation Plant & Animal Inventory including species at risk Species Status S-Rank Blanding s turtle (Emydoidea blandingii) Five-lined skink (Plestiodon fasciatus) Threatened Special Concern S3,S4 S3
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21,000 acres of developable Ecologically important lands Official Plans Do Not Protect Long-term Land trusts a vessel for choice Conserve Open Spaces & Wilderness Places forever
1902 Log Boom Go Home Bay
1902 Conservation Begins
Conservation Agreements All land owners can do A conservation agreement Retain full ownership Keep it wild forever
Gifts of Vacant Lots Capital gains relief Income tax relief Protection forever
Help keep it a special place!
Thank you!
Welcome Tax & Ecology Seminar presented by The Georgian Bay Land Trust
There are significant income and capital gains tax benefits available for Georgian Bay land owners who want to help protect the bay s wilderness.
Ecological Gift Gift of land (including a covenant or easement to which land is subject) Fair Market Value must be certified by Ministry of Environment Ministry of Environment must certify that it is ecologically sensitive land, the conservation and protection of which is important to the preservation of Canada s environmental heritage
The Rules: Tax credit based on the fair market value of the land (or easement) donated; Un-realized capital gain on property gifted is not taxable; 10 year carry forward of donation credit available; Not subject to normal 75% income limitation
Example 1 Sale vs. Donation Property has a certified fair market value of $1,000,000 Original cost to purchase property was $100,000 Owner of property has annual employment income of $150,000 which is expected to continue for the next 10 years Principal residence exemption would not be available on the sale of the property Analysis prepared using 2017 tax rates
Sale of Property Example # 1 Proceeds of Sale 1,000,000 Cost of Property (100,000) Capital Gain on Sale 900,000 Taxable Capital Gain (50% of gain) 450,000 Tax on Capital Gain (marginal rates) 237,942 Employment Income - 11 years @$150,000 1,650,000 Tax on Employment income at marginal rates (current year) 47,772 Tax on Employment income at marginal rates (future years) 477,720 Total Tax on Employment Income and Capital Gain 763,434 Net After Tax Cash Realized 1,886,566
Donation of Property Example # 1 Fair Market Value of Property Donated 1,000,000 Cost of Property (100,000) Capital Gain That Would be Realized if Property was Sold 900,000 Taxable Capital Gain (0% of gain) - Tax on Capital Gain (marginal rates) - Employment Income - 11 years @ $150,000 1,650,000 Tax on Employment income at marginal rates (current year) 47,772 Tax on Employment income at marginal rates (future years) 477,720 Reduction in Tax due to Donation Credit (Current year) (45,674) Reduction in Tax due to Donation Credit (Future year) (443,491) Total Tax on Employment Income and Capital Gain 36,327 Net After Tax Cash Realized 1,613,673
Example 2 Sale vs. Easement Property has a certified fair market value of $1,000,000 Original cost to purchase property was $100,000 Value of Conservation Agreement (Easement) determined to be $850,000 Owner of property has annual employment income of $150,000 which is expected to continue for the next 10 years Principal residence exemption would not be available on the sale of the property Analysis prepared using 2017 tax rates
Sale of Property Example # 2 Proceeds of Sale 1,000,000 Cost of Property (100,000) Capital Gain on Sale 900,000 Taxable Capital Gain (50% of gain) 450,000 Tax on Capital Gain (marginal rates) 237,942 Employment Income - 11 years @$150,000 1,650,000 Tax on Employment income at marginal rates (current year) 47,772 Tax on Employment income at marginal rates (future years) 477,720 Total Tax on Employment Income and Capital Gain 763,434 Net After Tax Cash Realized 1,886,566
Easement on Property Example # 2 Fair Market Value of Easement 850,000 Deemed Cost of Easement (85,000) Capital Gain on Easement 765,000 Taxable Capital Gain (0% of gain) - Tax on Capital Gain (marginal rates) - Employment Income - 11 Years @ $150,000 1,650,000 Tax on Employment income at marginal rates (current year) 47,772 Tax on Employment income at marginal rates (future years) 477,720 Reduction in Tax due to Donation Credit (Current year) (45,674) Reduction in Tax due to Donation Credit (Future years) (376,397) Total Tax on Employment Income and Capital Gain 103,421 Net After Tax Cash Realized 1,546,579
Example 3 Partial Sale vs. Partial Easement Property has a certified fair market value of $1,000,000 Land can be subdivided into two parcels. Parcel A has a value of $600,000. Parcel B has a value of $400,000 Value of Easement on Parcel B determined to be $340,000 Original cost to purchase property was $100,000 Owner of property has annual employment income of $150,000 which is expected to continue for the next 10 years Principal residence exemption would not be available on the sale of the property Analysis prepared using 2017 tax rates
Partial Sale of Property Example # 3 Proceeds of Sale 400,000 Cost of Property (40,000) Capital Gain on Sale 360,000 Taxable Capital Gain (50% of gain) 180,000 Tax on Capital Gain (marginal rates) 93,412 Employment Income - 11 years @ $150,000 1,650,000 Tax on Employment income at marginal rates (current year) 47,772 Tax on Employment income at marginal rates (future years) 477,720 Total Tax on Employment Income and Capital Gain 618,904 Net After Tax Cash Realized 1,431,096
Partial Easement on Property Example # 3 Fair Market Value of Easement 340,000 Deemed Cost of Easement (34,000) Capital Gain on Easement 306,000 Taxable Capital Gain (0% of gain) - Tax on Capital Gain (marginal rates) - Employment Income - 11 Years @ $150,000 1,650,000 Tax on Employment income at marginal rates (current year) 47,772 Tax on Employment income at marginal rates (future years) 477,720 Reduction in Tax due to Donation Credit (Current year) (45,674) Reduction in Tax due to Donation Credit (Future years) (150,981) Total Tax on Employment Income and Capital Gain 328,837 Net After Tax Cash Realized 1,321,163
Summary Tax Savings Example # 1 - Sale vs. Donation Total Tax on Employment Income and Capital Gain if Sold 763,434 Total Tax on Employment Income and Capital Gain if Donated 36,327 Tax Savings Due to Donation 727,107 Example # 2 - Sale vs. Easement Total Tax on Employment Income and Capital Gain if Sold 763,434 Total Tax on Employment Income and Capital Gain if Donated 103,421 Tax Savings Due to Donation 660,013 Example # 3 - Partial Sale vs. Partial Easement Total Tax on Employment Income and Capital Gain if Sold 618,904 Total Tax on Employment Income and Capital Gain if Donated 328,837 Tax Savings Due to Donation 290,067
Summary After Tax Cash Realized Example # 1 - Sale vs. Donation Net After Tax Cash Realized if Sold 1,886,566 Net After Tax Cash Realized if Donated 1,613,673 Additional Cash Realized if Sold 272,893 Example # 2 - Sale vs. Easement Net After Tax Cash Realized if Sold 1,886,566 Net After Tax Cash Realized With Easement 1,546,579 Additional Cash Realized if Sold 339,987 Example # 3 - Partial Sale vs. Partial Easement Net After Tax Cash Realized if Partially Sold 1,431,096 Net After Tax Cash Realized With Partial Easement 1,321,163 Additional Cash Realized if Sold 109,933
Questions?