Updated December 2018
Angela Iermieri | Financial Planner | Desjardins Group
Why not both? If you want to help others without neglecting your own needs, you're best off with a plan that maximizes tax benefits and leaves room for spontaneity.
You give to the firefighters' fundraising drive, community food banks, the Scouts and the local dance troop. You donate used clothing to your neighbourhood charitable organization. Did you know that approximately 9 out of 10 donors give out of compassion for people in need?1
Good for us: collective benefits
Generous gestures, whether in money, food or equipment, are not all compensated by governments, but they do provide a significant personal reward. The same is true when you give your time, an attentive ear, support in the form of volunteering, or any other "gift of self" that benefits both the recipient and the giver.
Good for me: tax benefits
Planned donations are made directly to the charitable organization of your choice. You don't have to give a lot to obtain tax benefits. Receipts to reduce your taxes are provided for amounts usually starting at $20. Many donors forget to ask for receipts or to claim their tax credit. Do you always remember? Of course, charitable organizations must be registered with the Canada Revenue Agency in order to provide receipts.
Financial and tax benefits
- You get a 35% tax credit (federal and Quebec combined) on the first $200 of donations, and 53% on any additional amount.2,3
- Couples can combine their donations on a single tax return to maximize their credit. Unclaimed donations can be carried forward up to five years.
Money isn't the only type of tax-deductible donation--far from it! You can donate shares, life insurance policies, works of art and other goods. Donating securities, shares, bonds or mutual funds can really pay off for you and the charity.
- In addition to reducing the tax you pay, this kind of donation will also spare you the taxes on any capital gains (difference between the purchase and sale price).
- Legacy gifts are donated to charitable organizations upon your death. You could make a bequest of your RRSPs or RRIFs, for example, and the donation tax credit would help offset the tax payable by your estate when your investments are cashed in.
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1 Statistics Canada.
2 For Ontario: 20.05% on the first $200 and 40.16% on the remainder.
3 Residents of Quebec must take into account the 16% federal abatement to find the actual credit amount.