Have You Made Donations Yet This Year? 

By Randall Orser | Business Income Taxes

As we’re nearing the end of 2017, it’s a good time to look at your potential deductions for the tax year. Whether you’re someone who donates throughout the year, or just in one lump sum. It’s a good idea to see how much you’ve donated so far, this year, and should you top it up.  You may also be doing a bit of cleaning out this fall and getting rid of things, so may be a good time to think about donating something in kind to your favourite charity. Now is definitely the time to look at what you can contribute to make the most of your tax deduction.

Your donations can consist of monies or gifts to registered charities, and political parties, too. You can look up on Canada Revenue Agency (CRA)’s website to see if the charity you wish to donate to is registered on the Charities Listing page. Ensure the charity is registered here before you give any of your money; this includes charities of foreign countries. Qualified donees are:

  • registered charities;
  • registered Canadian amateur athletic associations;
  • registered national arts service organizations;
  • registered housing corporations resident in Canada set up only to provide low-cost housing for the aged;
  • registered municipalities in Canada;
  • registered municipal or public bodies performing a function of government in Canada;
  • the United Nations and its agencies;
  • registered universities outside Canada that are prescribed to be universities the student body of which ordinarily includes students from Canada;
  • Her Majesty in Right of Canada, a province, or a territory; and
  • before June 23, 2015, registered foreign charitable organizations to which Her Majesty in Right of Canada has made a gift. For gifts made on or after June 23, 2015, registered foreign charities (which now include foreign charitable foundations) to which Her Majesty in Right of Canada has made a gift.

What is the eligible amount of my gift?

In most cases, the eligible amount of your gift is the amount shown on your charitable donation receipt.

However, in more technical terms, the eligible amount of the gift is the amount by which the fair market value of the gifted property exceeds the amount of an advantage, if any, received or receivable for the gift.

The advantage is generally the total value of any property, service, compensation, use or any other benefit that you are entitled to as partial consideration for, or in gratitude for, the gift. The advantage may be contingent or receivable in the future, either to you or a person or partnership not dealing at arm's length with you.

Look at all the donations you have given this year, do they add up to $200 or more? If not, you want to top that up to over $200 as you get a bigger credit for the amounts over $200. Currently, you get 15% tax credit on donations up to $200, and 29% on any amounts over that. For example, you give $750 to charity, you get $30 on the first $200 and $159.50 on the rest for a total of $189.50.

Generally, you can claim on line 340, all or part of these donations, up to a limit of 75% of your net income (line 236). As an exception, gifts of capital property are limited to 100% of your net income. Also, for the year a person dies and the year before, the 75% limit is extended to 100% of the person's net income.

Of course, as always, keep your copies in case CRA asks for them; usually, if you donate quite a bit of your income they’ll check.

First-time donor’s super credit

The First-time donor's super credit (FDSC) supplements the value of the charitable donations tax credit (CDTC) by 25% on donations made after March 20, 2013, by a first-time donor.

For the purpose of the FDSC, you will be considered a first-time donor if neither you nor your spouse or common-law partner (if you have one) have claimed and been allowed a charitable donations tax credit for any year after 2007.

The FDSC applies to a gift of money made after March 20, 2013, up to a maximum of $1,000, in respect of only one taxation year from 2013 to 2017.

If you have a spouse or common-law partner, you can share the claim for the FDSC, but the total combined donations claimed cannot be more than $1,000.

Example

An eligible first-time donor claims $700 of charitable donations in 2016, of which $300 are donations of money. The charitable donations tax credit (CDTC) and the first-time donor's super credit (FDSC) would be calculated as follows:

  • On the first $200 of charitable donations claimed, the CDTC is ($200 x 15%) = $30.
  • On the donations claimed in excess of $200, the CDTC is [($700 − $200) x 29%] = $145.
  • On the donations that are gifts of money, the FDSC is ($300 x 25%) = $75.
  • The total of the CDTC and FDSC is $250.

You do not have to claim all of the donations you made this year on your current year return. It may be more beneficial to carry them forward and claim them on your return for any of the next five years, or over the next ten years for a gift of ecologically sensitive land made after February 10, 2014.

Donating to charity is a worthwhile effort as you are able to help people, feel good about yourself, and get a tax deduction. As with anything in life, it’s a good idea to plan, and track what you’re donating for the year, so as to maximize your tax benefit the most. Check here for some samples of official donation receipts.


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