It’s the season of charitable giving! Christmas events supporting great causes, the holiday message of generosity, and of course, Dec. 31, the last day of the tax year. Albertans give more to charity than any province in Canada, so we thought we would give you a few tips to ensure you, and your charity of choice get the most out of your generosity.
The first $200 in donation only gets you 25% back in saved taxes. In Alberta, all your donations above $200 get you 50% back in tax savings! This is the highest benefit of any province, besides Quebec. If you don’t have a lot of donations in a year, pool your tax receipts up for a few years and claim them all in one year, by the same taxpayer. You can carry tax receipts forward for 5 years. If you don’t have a tax receipt, don’t claim it, because they will request it.
Generally, it is more beneficial to donate personally. The tax advantage is arguably quite similar, but donating personally tends to be more straightforward. Showing higher income on your personal tax return builds your personal credit.
You need an official tax receipt, with a receipt number, eligible amount of gift, Charitable Registration number and an authorized signature. Only organizations with charitable status can issue tax receipts, and there are very few outside Canada that qualify. The CRA has a registry of foreign charities that you get credit for in Canada, and there is currently only one organization on that list: the Woodrow Wilson International Center for Scholars.
Unsure if the organization is registered? Look them up on the CRA’s online registry of all Registered Charities.
If done right, donating public company shares can be more beneficial than cash. This is especially applicable if you have shares that have appreciated in value, and you could face significant capital gains tax. If you donate the shares, you are exempt from paying tax on the capital gains, and the charity can issue you a tax receipt for the fair market value of the shares. If you sold the shares and donated the cash, you would get the same tax receipt, but would have to pay tax on the capital gains. Life insurance is also great, but is a topic for another day.
You cannot donate services and get a tax receipt, however I have heard of people charging the charity at fair market rates for their services, and then donating cash back.
If you want a tax receipt for donating personal property, you are responsible for getting a qualified appraisal done. There are only certain types of property that would qualify for a tax receipt: land, houses/buildings, jewelry, vehicles, art and antiques. Special rules apply if you are an artist or a dealer.
The general rule for donations is that you get a tax receipt for the fair market value of your gift. If you are pitched an opportunity to donate $500 and they will give you back a $5000 tax receipt – this is a scam, don’t do it. Do a google search and ask around about a charity to ensure they are legitimate, and scrupulous with your hard-earned cash.
You will not get a tax receipt, but charities can put these items to good use if they are clean and in good working condition:
We encourage everyone to be generous this holiday season!
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