Year End Planning – Plan to Give to Charity

Winston Churchill once said: we make a living by what we get, but we make a life by what we give. It does feel good to do good. . .and doing good often attracts rewards as well.

One of the rewards is the charitable donation credit, which this year has a new “sister credit” you’ll want to know more about before year end.

Top tax rewards are received when gifts to your favorite registered charity are over $200. This results in a 29% federal tax credit. On gifts under $200, a 15% federal tax credit applies. In both cases, provincial tax credits are added to the federal tax credit. Spouses and common law partners are allowed to combine their individual charitable donations and report them on one tax return. This should be done on your 2013 tax return to ensure the maximum available tax credit for the family. But you may be tempted to give more this year, if you are a first time donor, as described below:

The New First Time Donor Tax Credit will be available in tax years 2013 to 2017. For taxpayers who have never claimed the donation tax credit or for those who have not done so for years after 2007, the donation tax credit will be increased from 15% to 40% for cash donations under $200 and from 29% to 54% for cash donations between $200 and $1,000. Note however, that where the spouse of the taxpayer made a claim after 2007, the taxpayer is not considered to be a first-time donor. The tax credit may otherwise be shared between spouses, but the maximum total donation eligible for the enhanced credit is $1,000.

But be cautious: receipts are required to make this claim. (See Distinguished Practices article in this issue of Knowledge Bureau Report.)

It’s Your Money. Your Life. Sharing both your money and your time can enrich your life. Giving the gift of money can produce for you a generous tax credit; the gift of time is equally valuable, though not tax deductible. Giving both can move mountains for those who are less fortunate. . .so give both generously.

Evelyn Jacks is President of Knowledge Bureau and author of 50 books on tax and personal wealth management. She is also the founder and director of the Distinguished Advisor Conference (DAC). The theme of this year’s three day think tank in Ojai, CA Nov 10-13 will be “Back to the Future – Collaborative Wealth Management.”  Follow Evelyn on Twitter at @EvelynJacks.

2 thoughts on “Year End Planning – Plan to Give to Charity”

  1. This is very helpful information.

    Could you please clarify: Is the 29% federal tax credit applied when a person donates $200 or more to a particular charity, or when charitable donations in general exceed $200 in a given year?

    Thanks!

  2. Hi Ellen,

    Thank you for your question. Hopefully this response will help clarify:

    For donations up to $200, the 15% federal rate is applied. For donations of amounts over $200, the 15% rate is applied to the first $200 of the donations and the 29% rate is applied to the remainder. For example, if you donated $500, the federal credit would be $200 x 15% + ($500 – $200) x 29% = $30 + $81 = $111.

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