Donate And Get An Income Tax Credit

by Pam on March 13, 2010

You can decrease the amount of income tax you pay by donating money to registered charities. When you file your taxes, be sure to include all your official donation receipts received from the organizations in order to take advantage of the tax credit.  Donating to charities is a meaningful way to decrease your taxes and to support a cause you are passionate about.

How do I know if a charity is registered?

If you are unsure if a specific charity is registered, you can search the listings on the Canada Revenue Agency (CRA) website.

What do I claim?

You can claim the full amount of your donation unless you received something in return for donating.  For example, if you donate $100 to a mission group but they give you a $10 t-shirt for your donation, you would only be able to claim $90.

How much is the tax credit?

The first $200 you donate is eligible for a federal tax credit of 15%.  After the first $200, the federal tax credit increases to 29%.  You may also be eligible for a provincial tax credit, depending on your province.  You can claim up to a limit of 75% of your net income, and in certain circumstances where you donate property, you may be able to claim up to 100%.

How can I maximize the benefit of the tax credit?

If you have a spouse or common law partner and you have donated more than $200 over the course of the year, it’s best to combine the donations together and file them on one tax return to maximize the tax credit benefit.

As well, you don’t have to claim your donations in the same year that you donated.  You can hold onto them to claim them for up to five years in the future.  This is wise if you are currently in a lower tax bracket and you are predicting that you will be in a higher tax bracket in future years.

What else do I need to know?

Donations must be made by December 31st to be claimed against your income for the current year.  You also need to remember that you have to claim tax credits for donations you carried forward from a previous year before you can claim tax credits for donations given in the current year.

For more information on the effects of donations on your taxes, check out the CRA website at this link.

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