Saving On Taxes with Charitable Donations in Canada
In 2021, according to the Fraser Institute, 17.7% of Canadians donated to charity. In the same year, the total amount of charitable donations reported in Canada was equal to around $11.8 billion.
Charities depend on this immense generosity to continue to provide social services, enhance the quality of life for communities and support the most vulnerable. There are a number of incentives to promote such giving; one of which includes claiming charitable tax credits.
This article will cover everything you need to know about the relationship between tax and charitable donations in Canada, including some top tips on how to save even more money.
How much do charitable donations reduce taxes in Canada?
Giving feels great, and it gets better thanks to Canada’s generous tax credits for charitable donations. If you make frequent charitable donations, you can receive up to 29% in federal tax credits.
The charitable donations tax credit in Canada is broken down into three tiers:
- 15% non-refundable federal tax credit for the first $200 of donations.
- 29% federal tax credit for donations beyond the $200 threshold.
- Provincial credits. In addition to saving on your federal taxes, you can get more money back from your province. Check out this tax credit calculator to easily see your savings both at a federal and provincial level.
Are charitable donations tax deductible in Canada?
While charitable donations aren’t a complete tax write-off in Canada, you will still benefit from tax breaks and save some of your hard-earned dollars.
From gifting property to crowdfunding fundraisers, there are a number of different qualifying donations that can be claimed on your taxes. The general rule of thumb is that a donation is thought of as an eligible gift when there is no compensation or benefit given in return.
This includes:
- Registered charities—the most common type of donation claimed on taxes. However, just because an organization calls itself a non-profit, does not necessarily mean it is a registered charity. Follow this link to see if a charity is registered with the Canadian Revenue Agency.
- Registered municipalities or municipal bodies within the Government of Canada.
- Registered national art services and amateur sports associations.
- Registered subsidized housing corporations.
- The United Nations and His Majesty in right of Canada, a province, or a territory.
- Gifts to a province or territory in Canada.
- Gifts of cultural property and/or ecologically sensitive land.
- Gifts to U.S. charities.
- Gifts of non-qualifying securities. These are defined as “shares of a corporation with which you do not deal at arm’s length, unless the shares are listed on a designated stock exchange obligations or another security issued by yourself, other than those listed on a designated stock exchange and deposits with financial institutions.”
How to find charitable causes to donate to
Giving to charity fundraisers is a simple and effective way to help people and save on your taxes. Browse through registered charity fundraising campaigns, and once a donation is made, you will receive tax receipts automatically from our charity partner, PayPal Giving Fund.
How to make a tax claim for charitable donations
Once you have determined which of your donations qualify, you can begin the process of claiming them on your taxes.
Let’s demystify the process:
- Collect the receipts of all unclaimed donations made before December 31st (you can submit any unclaimed donations up to five years old). If you file a paper return you will need to submit your receipts.
- Donations can then be claimed on Schedule 9 and Line 34900 of the federal tax return.
Tips and tricks to save more
There are a few ways you can optimize your charitable donations in Canada this tax season:
- Join forces with your spouse and combine your receipts to have the higher-income person claim the donations to maximize the amount subject to the higher tax credit rate, this then reduces the high-income surtaxes.
- Lastly, you may consider carrying your donation forward (up until the next five years). In turn, this would accumulate your donations so you can take advantage of the higher tax credit.
Important dates and times to remember
- Donations must be made on or before December 31st, so they can then be claimed on the tax return for the following year.
- Unclaimed donations can go as far back as five years.
- For the early birds, the Canada Revenue Agency (CRA) will start accepting electronic returns mid-to-late February (the exact date changes every year).
- For the majority of tax filers, April 30th is the deadline to file taxes and returns. If this date falls on a weekend, the CRA extends the deadline to the following business day.
Self-employed persons must file on or before June 15th, but if you have a balance owing for the previous year, you have to pay it on or prior to the April 30th deadline.
Note: For all of the dates listed here, make sure you double-check them for every year you file a tax return in case they have changed. Exact dates may vary.
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Take the next step and rally behind your favourite causes with free charity fundraising. Go from donor to fundraiser in three easy steps using GoFundMe.
- Choose from our list of registered charities.
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