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Charitable Giving’s
9-19-2018
Every day, Canadians contribute both their money and time to improve the well-being of their communities. Their financial donations help a variety of causes, such as
· ensuring shelters,
· social services organizations and
· food banks are able to deliver their services,
· universities and hospitals are able to advance medical research, and
· political, religious and environmental groups can have their voices heard.
Volunteering also has a direct impact on the lives of Canadians, whether it is teaching and supporting children, providing health care, or supporting and giving companionship.
According to report by Globe and Mail Churches, mosques, synagogues and temples are by far the biggest beneficiaries of charitable monies. All of the donations that were eligible for a tax receipt, roughly 40% - about $4 billion - went to religious organizations. It also found that religious people give more, and the more religious you are, the more you give.
It is better to give than receive, especially when that giving results in tax savings.
Contributions can be made to many worthwhile causes and non-profit organizations, but only donations to registered charities qualify for an income tax credit. Although they are often called “tax deductible,” they qualify for a non-refundable tax credit, not a deduction from your income for tax purposes.
Raising the issue of charitable giving with your family, friends, clients can by deeply rewarding – on both a personal and professional level. Talking about philanthropy can strengthen your client relationships and make a difference in your community at the same time.
You can’t always claim the full value of gifts given to charities. Instead, you are limited to claiming gifts up to 75 percent of your net income in most cases. The exception to the 75% rule is for gifts of either certified cultural property or ecologically sensitive land. You can claim a maximum of 100 percent of your net income for these types of gifts.
Once you have determined the amount eligible for the charitable tax credit, you can use the Canada Revenue Agency’s charitable donation tax credit rates table to determine the actual tax credit amount. There are separate rates tables for federal and provincial donations.
If you donate $200 or more, you qualify for a higher rate. This means that you are eligible for a tax credit worth 15 percent on the first $200 donated, plus a tax credit worth 29 percent on any amount above $200.
For example, if you donate $200, you receive a tax credit worth $30 (15 percent of $200). However, if you donate $500, you receive the same $30 tax credit, plus a tax credit worth $87 on the amount above $200 ($500 – $200 = $300 x 29 percent = $87), for a total tax credit of $117 ($30 + $87). This tax credit helps to lower your taxes payable.
Footnotes: Footnotes: This column is presented as a general source of information only and is not intended as a solicitation for business. Mohammed Yasin, CPA,CGA, is the principal of M. Yasin & Co. Inc., Certified General Accountants and has offices in Vancouver & Surrey,B.C.
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