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6 Things to Remember During the Season of Giving

6 Things to Remember During the Season of Giving

As 2018 draws to a close Akeroyd Leung Amlani (ALA) outline the vital need-to-know-info about Charitable Donation Tax Credits, including qualifying charities, Super Credit and those all-important receipts.

‘Tis the season of gift giving and as the financial year comes to an end, we are encouraging all of our clients (personal and corporate) to lock in their charitable donations to support a great cause of their choosing. On total donations over $200 you can reasonably expect 45% of this amount to be credited against your income tax otherwise payable; a reward for your philanthropy!

From local community projects to nationally recognized charities, donations made before the year ends not only positively impact the chosen organization but also reduce your tax obligations come March/April.

To help fully explain the concept, the ALA team has compiled a list of the 6 Things to Remember During the Season of Giving:

1. First-time Donor Super Credit

The First-time Donor Super Credit (FDSC) is granted to individuals, and their respective spouse or common-law partners, who have not claimed or been allowed a charitable cash donation tax credit for any year after 2007. If one is deemed a first-time donor, the Super Credit will supplement the value of the charitable donations tax credit by 25% on any donations made after March 20, 2013. Learn more about the specific criteria here.

2. Receipts, Receipts, Receipts!

In a predominately digital age, it sometimes seems unnecessary to keep paper copies of payments. However, in the case of claiming charitable donation tax credits, payment receipts are crucial! Keeping hold of receipts which detail vital information such as date of donation, reference number, organization name and registered charity number guarantees individuals reviewed by the CRA will be in the clear.

3. Different Types of Charitable Claims

According to the CRA, in addition to claiming financial donations, individuals are also permitted to claim, “eligible amounts of gifts to a limit of 75% of your net income.” In certain cases, individuals who have donated certified cultural property or ecologically sensitive land can result in claims of up to 100% their net income. Find out more about the different types of charitable tax credits here.

4. Don’t Forget the Deadline!

This particular Tax Credit runs on a calendar-year-basis, from January to December, meaning donations must be made by December 31 of the applicable tax year. ALA urges any gift-givers to make a note of this date to ensure the deadline does not get forgotten!

5. Does Your Charity Qualify?

Many individuals assume eligible donations for tax purpose only apply to the bigger, nationally recognized charitable organizations, when in fact there is a long list of organizations that meet the requirements. These include community projects such as low-cost housing corporations and athletic associations. Find out if your cause of choice qualifies as a CRA recognized charity here.

6. Combine Your Donations!

If your spouse or common-law partner has also made a charitable donation, you are permitted to combine your donations, claiming them on one individual’s tax return. Ideally, the higher-income partner should claim the charitable donations tax credit as this will reduce surtaxes on provincial and federal taxes.

We hope this has helped to clear up some of the common misconceptions surrounding the subject of Charitable Donations Tax Credits. However, if you still have any unanswered questions or wish to learn more about the topic, feel free to reach out to our Office Coordinator, April on 604-259-2441 or admin@alacpa.ca.

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