Families

Tax Benefits of Charitable Donations

Canada has a generous tax credit system for donors to charities. The Charitable Donations Tax Credit can be up to 29 percent of the amount you donated at the federal level. You may also be entitled to an additional amount reaching up to 24 percent of your donation depending on your province of residence. There are several of rules that determine whether you qualify.

Eligible Donations

The CDTC is available for anyone who makes a donation to a qualifying donee. A donation is defined as a gift for which no consideration is given in return. Your donation can be money, or it can be anything else of value. If you receive something in exchange for your donation, such as tickets to a show, then the value of what you received must be subtracted from the amount you donated and you can only claim the CDTC for the difference.

A qualifying donee is a registered charity or one of several other public organizations, such as an amateur athletic association, which can issue tax receipts. Make sure you obtain a receipt and that the donee issuing it is legally entitled to do so. The Canada Revenue Agency provides a searchable online database that allows you to confirm whether a charity is registered and eligible to issue official donation receipts. You can also determine the status of a registered charity by calling the CRA at 1-800-267-2384.

Claiming and Calculating the Credit

To claim your credit, report it on your annual tax return. As a rule, at the federal level, your credit will be 15 percent of the first $200 of donations and 29 percent of your additional donations. All provinces also have similar credits, which fluctuate between 4 percent and 24 percent. The CRA provides an online tool to calculate your credit, including the provincial component.

Since 2013, there is an additional credit available to new donors called the First-Time Donor’s Super Credit. If you or your spouse are making your first donation since 2007, an additional credit of 25 percent of the first $1,000 in donations may be available to you.

Donations From Previous Years

Since the CDTC is greater for donations higher than $200, it may be worthwhile to accumulate donations and claim them all together in the same year. There are two ways to accumulate donations: you can combine them with your spouse`s on a single tax return or you can claim donations from multiple years together in the same year. Donations can be carried forward for up to five years.

If you need to know if you have claimed donations in previous years, you can find out using the CRA’s My Account online service. Once you log into your account, click on the tax returns tab at the top of the page. From there, you can view your tax returns from previous years. Look at line 349 of your previous returns to determine whether you have claimed donations for each of the past five years.