The Alternative Minimum Tax and Charitable Giving: A 2026 Planning Guide

For a long time, donating appreciated public company shares to a registered charity was one of the cleanest moves in Canadian tax planning. You got a donation receipt for the full fair market value, and you paid no capital gains tax at all on the accrued gain, regardless of your income. Since January 1, 2024, that second part is no longer guaranteed. If your income is high enough to fall into the Alternative Minimum Tax regime, a large gift of appreciated securities can now generate real tax payable in the very year you thought you were doing something purely generous.

What Actually Changed in 2024

The Alternative Minimum Tax exists to make sure high-income taxpayers who use a lot of legitimate deductions, exemptions and credits still pay some minimum level of tax in a given year. Every year, a taxpayer effectively runs two parallel calculations, regular tax and AMT, and pays whichever is higher. Any extra amount paid under AMT isn't lost forever; it can generally be carried forward for up to seven years and used to reduce regular tax in a year when AMT doesn't apply (Scotia Wealth Management, 2025).

Budget 2023 first proposed an overhaul of the AMT calculation, and Budget 2024 refined it before the changes received Royal Assent through Bill C-69 on June 20, 2024, effective for tax years beginning after 2023 (Doane Grant Thornton, 2023). The federal AMT rate increased from 15% to 20.5%, and the basic AMT exemption rose to roughly the start of the fourth federal tax bracket, which sat at $177,882 for 2025 and continues to be indexed to inflation each year (Invested MD, 2025). On its own, a higher rate applied to a larger base already changes the math for anyone realizing significant capital gains, using the Lifetime Capital Gains Exemption, or exercising employee stock options in a given year. Charitable giving, though, got two specific adjustments of its own.

The Two Charitable-Giving Triggers

The first change affects every donation, in cash or in kind. Under the pre-2024 rules, the donation tax credit could be applied in full against AMT owing. Since 2024, only 80% of the credit is allowed for AMT purposes, a figure that itself was a concession; the original 2023 proposal would have limited it to just 50%, and the charitable sector's pushback during consultation is largely why the final number landed higher (Imagine Canada, 2024).

The second change is narrower but often larger in dollar terms. When you donate publicly listed shares, mutual fund units, or segregated fund units directly to a registered charity, the regular tax system has always exempted the accrued capital gain entirely, not just the usual 50% inclusion, the whole gain. For AMT purposes specifically, that exemption is now only partial: 30% of the gain on donated securities is included in the AMT base, up from 0% before 2024 (Fasken, 2023). Combine a smaller donation credit with a partially taxable gain, and a gift that used to be closer to a wash on an after-tax basis can generate a genuine tax bill.

A Worked Example

Doane Grant Thornton illustrated the shift with a donor who realizes a $2 million capital gain on marketable securities and separately donates $1 million of public company shares with a $500,000 cost base in the same year. Under the pre-2024 rules, that donor's total federal and Ontario tax for the year came to roughly $116,000. Run the identical facts through the 2024 rules and the total climbs to approximately $343,000, an increase driven almost entirely by federal and provincial AMT that simply didn't apply before (Doane Grant Thornton, 2023). A second scenario in the same analysis, a donor who sells investments for a $2 million gain and separately writes a $1 million cash cheque to a charity rather than donating shares, still saw tax rise from about $116,000 to roughly $296,000. Cash gifts are affected too, just through the credit-rate change alone rather than the added capital gains inclusion.

Both of those AMT amounts are eligible for the seven-year carryforward, so this isn't a case of the tax disappearing into the void. It is, however, a real cash outlay due with that year's return, which matters a great deal if the whole point of the gift was to convert an illiquid asset into charitable impact without a matching liquidity event to fund a tax bill.

Why the Cancelled Capital Gains Hike Doesn't Help Here

Some confusion persists because 2024 and 2025 also saw a separate, unrelated capital gains story play out. Budget 2024 proposed raising the general capital gains inclusion rate from one-half to two-thirds on gains above $250,000 for individuals, and on all gains for corporations and most trusts. That measure was deferred in January 2025 and then cancelled outright in March 2025, meaning the regular inclusion rate remains 50% into 2026 (Department of Finance Canada, 2025). That cancellation is good news for anyone realizing a capital gain under the ordinary tax system, but it does nothing to reverse the AMT-specific changes described above. The AMT capital gains inclusion rate of 100% (versus 80% pre-2024) and the 30% inclusion on donated securities are both separate provisions that were legislated in 2024 and remain fully in force (Invested MD, 2025). It is entirely possible to be unaffected by the cancelled general rate hike while still owing meaningfully more AMT than you would have three years ago.

The Corporate Route Around the Problem

Here is the detail that changes the calculus for a lot of private company owners. The rules described above apply to individuals and certain trusts. They do not apply the same way to a corporation. If a private corporation, rather than its shareholder personally, donates appreciated public securities directly to a registered charity, the non-taxable portion of that gain still flows into the corporation's Capital Dividend Account exactly as it always has, and none of the personal AMT mechanics described in this article come into play at the corporate level (Canada Gives, 2023). The corporation gets its own donation deduction against corporate income, and the resulting CDA credit can later be paid out to shareholders as a fully tax-free capital dividend.

For an owner who was planning to donate appreciated shares personally and who has a private corporation available to hold or acquire those same securities, moving the gift to the corporate level is worth evaluating with an advisor before the transaction happens, not after. The mechanics of transferring appreciated securities into a corporation ahead of a donation carry their own tax considerations, including possible attribution and anti-avoidance rules, so this isn't a same-day decision.

Who Actually Needs to Worry About This

Most Canadians will never see an AMT calculation exceed their regular tax bill in a given year. The people who should specifically model it before finalizing a large gift include anyone who, in the same tax year, expects to: realize a significant capital gain from a business sale, real estate disposition, or investment liquidation; use the Lifetime Capital Gains Exemption on qualifying shares; exercise a meaningful number of employee stock options; or donate a large block of appreciated securities rather than cash. Stack two or three of those in the same calendar year and AMT exposure moves from theoretical to likely.

A Planning Checklist

1. Run an AMT projection before finalizing a large gift, not after the securities have already been transferred to the charity.
2. Ask whether the gift could be made by a private corporation instead of personally, particularly if the underlying securities could be held corporately.
3. Consider spreading a very large gift across more than one tax year to keep each year's AMT exposure lower, where the timing of the underlying asset allows it.
4. Track AMT carryforward balances carefully, since amounts paid are recoverable against regular tax for up to seven years but only if claimed.
5. Model AMT alongside any LCGE claim or stock option exercise happening in the same year, since these preference items compound with charitable giving rather than being assessed in isolation.