Saving On Taxes with Charitable Donations in Canada
In 2017, $10 billion was donated to charities with nearly 20% of Canadians claiming charitable donations in Canada, according to the Fraser Institute. 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. Ahead of tax season, here is what you need to know about charitable donations in Canada.
How much do charitable donations reduce taxes in Canada?
Giving feels great, and it gets better—If you make frequent charitable donations, Canada has generous tax credits for charitable donations that can be up to 29% of the amount donated at the federal level. The charitable donations tax credit in Canada are 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?
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 was no compensation or benefit given in return.
- Registered charities, which is the most common type of donation claimed on taxes. But 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 Her 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, which is 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.”
Finding causes you care about
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.
Claiming charitable donations
Once you have determined which donations you have made 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.
2. 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:
- If it is your first time claiming charitable donations, you can claim a first-time donor’s super credit (FDSC) which in return gives you an extra 25% on your tax credit. Keep note, the additional credit is only given on donations up to $1,000.
- 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 prior to December 31st, 2019 to be claimed on 2020’s tax return.
- Unclaimed donations can go as far back as five years.
- For the early birds, the Canada Revenue Agency (CRA) will start accepting electronic returns on February 24th.
- For the majority of tax filers, April 30th is the deadline to file taxes and returns.
Self-employed persons must file on or before June 15th, but if you have a balance owing for 2019, you have to pay it on or before April 30th.
Starting a charity fundraiser is as simple as 1..2..3…
Take the next step and rally behind your favourite causes with free charity fundraising. Go from donor to fundraiser in three easy steps.
- Choose from our list of registered charities.
- Launch your fundraiser and share it with family and friends to raise money.
- We partner with PayPal Giving Fund Canada to ensure that funds are securely and automatically delivered to your charity.