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Syrian Crisis - Tax Benefits of Giving
9-09-2015
Giving to Charitable organizations makes a world of difference for the Syrian refugees. Giving can also be of financial benefit to you, providing tax advantages for you and your family.
Registered charitable organization issues gift receipts for all contributions. That receipt can then be used to receive a federal and provincial tax credit on your annual Canadian income tax return. You can claim all or part of each donation you make, up to the limit of 75 per cent of your net income for the year. Either spouse can claim the tax credit, regardless of whose name is on the charitable donation receipt—and unclaimed donations can be carried forward for up to five years.
Canadians are entitled to claim non-refundable tax credits on any donations made to Canadian registered charities. The federal tax credit amounts to 15% on the first $200 of donations claimed in a year, and 29% on donations in excess of $200.
Provinces provide their own tax credits on charitable donations. Gifts made by spouses and common law partners can be amalgamated and claimed by the person who would receive the greatest tax savings.
First-time donor?
The government defines a first-time donor as a person — or in the case of a married or common-law couple, the person and his or her spouse or partner — who has not claimed a charitable donation tax credit on his or her personal tax returns after 2007.
The spouses/partners can share the credit; but the total amount claimed cannot exceed $1,000, the same amount available to your client if he or she were single.
The credit can be applied to cash donations of up to $1,000, and can be claimed only once in any taxation year from 2013 to 2017.
How big are the savings?
Here’s an example to illustrate. Let’s assume you have a client named Leslie who is considered a first-time donor. She is single, lives in British Columbia and decides to donate $1,000 to her local charity, which is a registered charity.
The combined federal and B.C. credits, which would include the FDSC would be equal to 50% (15% + 25% (federal) + 10% provincial) on the first $200 Leslie donates, plus 75% (29% + 25% (federal) + 21% provincial) on the remaining $800 donation.
The tax agency has resources on its website, including a charitable donation tax credit calculator, to help first-time donors with the calculations.
The intent of first time donor incentive is to draw in a different demographic, a different group of Canadians and get them accustomed to becoming part of the charitable sector and join so many other Canadians in giving to the cause of Syrian refugees.
Footnotes: Footnotes: This column is presented as a general source of information only and is not intended as a solicitation for business. It is always recommended that you consult a qualified tax professional beforeembarking on any of the suggestions outlined above. Mohammed Yasin, CGA, is the principal of M. Yasin & Co. Inc., Certified General Accountants and has offices in Vancouver & Surrey,B.C. For more information on this topic or any other taxation matters, please contact taxes@alameen.ca.
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