Giving To Charity? Take Advantage Of The Tax Breaks

Generosity Pays Off

Your first $200 of donations made to a registered charity results in a 15 per cent federal tax savings. For every dollar over $200, you receive a 29 per cent tax credit.

Donation Limits

Your donations cannot exceed 75% of your net income. The only exception is in the year of death or the immediate preceding year and then donations can be 100% of net income.

Provincial Benefits 

In addition to the federal tax savings, you also receive credit from your home province. For example, Albertans receive a 21 per cent tax credit for donations over $200. This means that the federal and provincial governments are paying for half of your donations in excess of $200.

Pooling Donations 

Married or common-law spouses can pool their charitable donations to maximize their tax savings. Since it is a non-refundable tax credit, it does not matter who claims as long as he or she has tax payable to offset it.

Keep Your Receipts

You are allowed to claim up to six years of charitable donation receipts in one year. So if you have not contributed $200 in 2011, you may want to wait and collect your charitable donation receipts for another year. It also means if you find a receipt you didn’t include in 2010, you can include it on your 2011 tax return.

Stock Donations

If you make a donation of capital property, you will get a donation receipt equal to its value at that time. Normally it will also trigger a capital gain. However, if you make a gift of publicly traded securities or ecologically sensitive land, the capital gains inclusion rate is deemed to be zero, with the result that you are not taxed on it.

Donations To Foreign Charities

 Normally you cannot claim donations to foreign charities. However, there is an exception for donations made to foreign organizations to which the Canadian government has made a gift and also to certain foreign universities whose student body includes students from Canada. You can also claim donations to U.S. charities if you have U.S. source income and they do not exceed 75% of that income

Donation Amount Must Match Receipt

 If a charity organization offers to provide you a receipt for more than your actual donation, it is most likely a scam. People often believe that because the promoters of these schemes have registered as a tax shelter with the CRA that they are legitimate. However, the CRA will almost certainly challenge your claim and may also assess penalties