This is the first in a three-part series on donations, focusing at the tax advantages of making donations, specifically cash.
Canadians are very giving, according Statistics Canada, 84% of us give to charity and together we give an average of $9 billion dollars a year. That’s pretty amazing.
People donate for many reasons – to do good, to support a cause you believe in, or to leave a lasting legacy.
But let’s be clear: making a donation won’t make you richer, at least not financially! Some think that there are ways to make donations that will leave you with more money in your pocket once the tax credits are received. That’s just not true.
You may already have causes you feel strongly about, but if you decide to add new charities to your roster, make sure the organization is qualified. That’s one who can issue official donation receipts for gifts they receive. You can find and vet charities via websites like Canada Helps and the Canada Revenue Agency.
When deciding on a charity, there are a couple things to keep in mind. Look at how the charity is spending their money. Lower admin costs generally indicate that more money is going to the cause, not the administrators. And of course, get the donation receipt as that is what you’ll need when claiming the tax credit.
Speaking of tax credits, here’s how they work: You get both federal and provincial non-refundable tax credits. At the federal tax level, you get a credit of 15% for the first $200 of your annual charitable donations. It jumps to 29% for cumulative donations over $200. Donors who sit in the 33% federal tax break and donate more than $200 annually get a 33% tax credit for their donations. But you do have to make over $200,000 to get that credit.
Revenu Québec also offers a non-refundable tax credit for charitable giving. The credit is worth 20% of the first $200 you donate and 24% of all other donations. If you don’t use the entire credit, you may carry it forward for five tax years.
There is a change for 2017 onward where a higher rate of 25.75% will apply for donations over $200, if the donor has an annual net income of over $100,000.
|
If I earn: |
|
Less than $100K |
Between $100K and $200K |
Over $200K |
| If I donate: |
I get back: |
| $200 |
$70 |
$70 |
$70 |
| $1,000 |
$424 |
$508 |
$540 |
| $5,000 |
$2,544 |
$2,698 |
$2,890 |
So, the important question: It depends on how much you donate but there are tools available on the CRA’s and the Revenu Quebec’s websites where you can plug in your donations and your income and get a number. This doesn’t take all tax situations into account, of course, but it will give you an approximation based on the numbers you provide. This table will give you an idea of the amounts depending on your income.
Now if you’re a first-time donor, you can take advantage of the federal government’s First-Time Donor’s Super Credit, which provides an additional 25% non-refundable tax credit on up to $1,000 in donations. A first-time donor is someone who hasn’t claimed a donation credit after 2007 and it does expire at the end of 2017, so if you’re thinking about making a donation, this is the year to do it! So get out there and do some good.