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November 22, 2018

Contributions to Charity & Tax Credits

Written by Jordan Cahill

Does claiming your charitable donation take away from the “charitable” aspect of your donation?

This question was brought to our attention recently, and gave us some food for thought! Looking into it a bit further, we realized that there are a lot of opinions surrounding financial giving and donations. So, we thought we would add our experience & opinions on this topic,  as well as provide some practical tips and information relating to CRA & your 2018 tax return.

So- to the question at hand! Does claiming your charitable donation take away from the “charitable” aspect of your donation? In our opinion, the simplest response is: no!

It is true that you receive tax credits when claiming your charitable contributions during the year, and that this does financially benefit you. However, this doesn’t take away from the reason you gave or the wonderful charities you chose to give to. Furthermore, the Canadian government provides these incentives to encourage more people to donate, thus promoting charitable giving and encouraging more donations to local & international charities. Finally, you can always choose to donate the amount credited on your return back to a charity. If the government is willing to provide tax credits for charitable contributions on your tax return, thus lessening your tax bill, why not use that money towards future charitable contributions? Imagine how much MORE generous that enables you to be towards your favourite charity/charities each year.

We currently are providing information to clients on the best way to claim charitable contributions on their upcoming tax return in order to maximize their tax credits. We have also helped clients know the precise amount of money they saved by claiming their donations (thus, allowing them to donate that amount the following year in addition to their usual giving). Our partners and staff are CPA’s with extensive knowledge of CRA (Canada Revenue Agency) and have the experience to maximize your contributions. We hope this information helps you make an informed choice as you begin or continue to make donations before the year end.

As we approach the end of the 2018 tax year, you may have already decided to donate to a charity, organization, foundation, or group. Below we have compiled some important tips and resources to help you as you generously give.

Tips for donating this holiday season:

  1. Make sure that the organization or cause you are donating to is a registered charity.
  • You can only claim donations on your tax return if they are a registered charity. CRA has made it very easy to search if a cause is eligible to be claimed for tax credits, using their basic search or list. There are many North Vancouver & Vancouver based charities included on this list.    CRA Charity list
  1.  Make sure you know the eligible amount of your gift before claiming.
  • If you received any service, gift or property in return for your donation (ex. Tickets to a show, a free haircut, a night stay in a hotel, etc.), the monetary value of that gift needs to be deducted from the donation amount on your return. In most cases, the amount able to be claimed is clearly printed on your charity donation tax receipt.
  1. You can carry forward donations
  • It may be beneficial to wait and claim some of your donations on a subsequent year’s tax return. You can carry forward and claim donations for up to 5 years after the donation was made. This would be a great question for our Cahill CPA accountants as we will be able to determine the best strategy for maximizing your tax credit.
  1. Don’t forget about the first-time donor’s SUPER credit! (FDSC).
  • According to CRA, this super credit supplements the value of the charitable donations tax credit by 25% on donations made after March 20, 2013, by a first-time donor. Follow this link for more information, if you think you are eligible.    Super Credit Information

If you have any further questions about financial giving, claiming charitable donations, or donating shares & stock options, please contact Cahill CPA before the Christmas holidays to make sure you are making the most of your upcoming tax return!

 

Jordan Cahill

Jordan Cahill is a Chartered Accountant (CA) and Chartered Professional Accountant (CPA) with a bachelor degree in business from Simon Fraser University. He articled at a national CA firm in Vancouver,BC and previously held a position at the Canada Revenue Agency as a business auditor.

Jordan Cahill on LinkedIn

Website: www.cahillpro.com

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