The donation: a paying gesture for all

The donation: a paying gesture for all

 
There are a wide variety of reasons why people give their time or their money. Among those most often mentioned are the desire to advance research, the desire to give back to others, the sensitivity to a specific cause or simply the desire to enrich the life and culture of a community.

According to a Statistics Canada study, the average annual amount per donor was $ 446 in 2010 [Note 1]. Also according to the same study, 94% of Canadians aged 15 and over had donated material goods or food, or had donated money.

The Canada Revenue Agency (CRA) reports that there are over 160,000 charities and nonprofits in the country. With so many resources, it's not always easy to know where to start. Questioning your passions and concerns allows you to target those who work for a cause or an issue that is close to our heart. It's also good to know that the most effective organizations spend about 75% or more of donations to fund their programs.

Once the cause and organization have been chosen, it is still important to ensure that the organization being supported is legitimate. The list of Government of Canada charities External link. Opens in a new window, which is updated regularly, will help you make an informed choice. On this list, you will find information about the charity, such as contact information, general activities and financial information, including the public portions of its annual information return.

Good for me: the tax benefits

Whether in money, food or material, there is no doubt that any donation will provide significant personal gratification. However, it is also good to know that the federal and provincial governments grant tax credits to donors relative to the value of their donation [Note 2].

Not all eligible donations are made in cash, far from it. It could be stocks, life insurance, artwork, or other property. For example, donating publicly traded securities such as stocks, bonds, or mutual funds can be as beneficial to you as it is to the charity you choose. In addition to reducing the amount of your taxes, these donations will save you tax on any gains made since they will be deemed nil.

The testamentary donation will be received by a charitable organization upon your death. The liquidator can divide the donation between your last two tax returns and the estate's tax returns for the period following the death. Among other things, you could give all or part of your RRSP or RRIF.

In addition, some donations benefit from an increase [Note 3]. Because these measures are cumulative, the tax credit can cut the net cost of a donation that is made directly to the charity of your choice by almost half. You don't have to give big to get tax benefits. Often times, starting at $ 20, you will receive a receipt that can be used to reduce your taxes.

Tax benefits in detail

A non-refundable tax credit is granted on the donor's income tax return. The table below illustrates the applicable rates.
Rate of non-refundable tax credits for donations Federal [Note 4] Quebec Ontario
First $ 200 donated 15.00% 20.00% 5.05%
Donations over $ 200 11.16%
- portion attributable to taxable income in 2019 other than below 29.00% 24.00%
- portion attributable to taxable income in 2019 that exceeds $ 210,372 (federal) and $ 106,556 (Quebec) 33.00% 25.75%
A couple can combine donations on one tax return to maximize the tax credit.
Take advantage of the provision to accumulate and defer donations for up to 5 years if you do not use them in the year you made them.