Charitable Donations

Donations are a great way to give back to your community and can make a difference in your federal tax return. The following article will not only help you understand significant ways to give back to your community, but also help you to realize if your donations are eligible for qualifying. A taxpayer can claim donations made in the proposed year plus carry forward any donations from the previous five years. Generally, a taxpayer can claim part or the entire eligible limit of the gift, up to the limit of 75% of net income for the year. The limit is increased to 100% in the year of death and preceding year. The taxpayer can claim the donation made by his or her spouse. Donations should be combined to derive the maximum benefit.

US Based Charities

Donations made to US based charities can only be claimed against the income from that country. For instance, if Mr X made a donation to an organization of the US and he does not have any income from US sources, he cannot claim the donation against the income from Canadian sources.

Donation credit is as follows:

15% on the first $200 of total donations

33% on whichever of the following amount is Less:

The amount of the donations for the year above the first $200

The amount of the taxable income that is over $210,371 (2019) or $214,368 (2020)

29% on the total donations for the year above the first $200, which are not eligible for the 33% rate above

Qualifying Donations are made to:

A registered Canadian charity

A registered Canadian amateur athletic association

A tax-exempt housing corporation residing in Canada that only provides low-cost housing for seniors

a Canadian municipality

The United Nations or an agency thereof

A prescribed university outside of Canada

A charitable organization outside of Canada to which the Government of Canada has made a donation in the tax year, or the previous tax year

The Government of Canada, a province, or a territory

Non-Qualifying Donations:

Lottery tickets purchased from Hospitals

Charity tournaments

Shriners circus

Donations made to Provincial police

Political contributions made to Federal and Provincial governments

Donations of blood

Common Mistakes:

Claiming donations made to a non-registered charity. Check out if the charity is registered with the CRA

Charities and giving - Canada.ca

Claiming donations made overseas as donations

Claiming hospital lottery tickets as charitable or medical expenses

Claiming political contributions as charitable donations

Documents Needed:

Official receipts (name of the charity, charity registration number and name of the donor) are required by the CRA. The taxpayer can simply claim a donation made within 5 years on the tax return.

Capital Properties:

Capital property includes depreciable property, and any property which, if sold, would result in a capital gain or a capital loss. The taxpayer usually buys it for investment purposes or to earn income. Capital property does not include the trading assets of a business, such as inventory.

Some common types of capital property include:

Cottages

Securities, such as stocks, bonds, and units of a mutual fund trust

Land, buildings, and equipment used in a business or a rental operation

If the taxpayer donates capital property, the CRA considers the property disposed of for proceeds equal to the fair market value (FMV) of the property.
The taxpayer has to report any capital gain in the year the property is donated. In some cases, the taxpayer may be able to claim a capital loss in the year they donated the property at the time of donation. However, if a gift of capital property was made to a registered charity or other qualified donee, to Canada, a province, or a territory, and the FMV of the donated capital property, otherwise determined, is more than its adjusted cost base (ACB), the taxpayer may designate an amount that is less than the FMV to be proceeds of the disposition.