Charitable Donation Tax Credit

06 Sep 2018

Tax Team

Giving to charity can be a great way to support your community and to feel good. Income tax credits are a great bonus!

Individuals

As an individual who donates to registered charitable organizations, you are eligible to claim a credit of up to 75% of net income. The eligible donation amount will not be a direct deduction from taxable income but rather a federal tax credit at a rate of 15% on the first $200 donated and 29% on any remaining amount. Any unclaimed donation credits can be carried forward up to 5 years.

Further, there is a provincial donation tax credit available in Ontario at a rate of 5.05% on the first $200 donated and 11.16% on any remaining amount.

Donations made by you and or/your spouse (common-law partner) can be claimed by one taxpayer. Therefore, if one spouse is in a lower marginal tax bracket, it may be tax efficient to claim all donations in the tax return of the spouse (common-law partner) with the higher marginal tax bracket.

Corporations

As a corporation that donates to a registered charitable organization, the corporation will receive a tax deduction of up to 75% of its taxable income in the respective taxation year. Any unclaimed charitable donations can be carried forward up to 5 years.

In order to qualify, the relevant donations must be made to a registered charity. For the Canada Revenue Agency (CRA) approved charity list go here: CRA List of Charities.

All taxpayers are able to donate to a registered university outside of Canada if it can be found on the CRA list of prescribed universities outside Canada. For the CRA list of registered universities go here: CRA List of Prescribed Universities outside Canada.