What you need to know about charitable tax credits

by | Dec 5, 2023 | Community

As we approach the final days of 2023, the clock is ticking, and the deadline for eligible charitable donation tax credits is just around the corner on December 31. Beyond the impact on the community, there’s a personal benefit to your end-of-year generosity. By donating to Second Harvest before December 31, you not only help those in need but also receive a tax receipt for your donation to reduce the amount of tax you owe.   

What are eligible donations? 

The first step is understanding what is considered an eligible donation. In Canada, only contributions made to registered charities qualify for these credits. It’s important to verify the charitable status of an organization before making a donation to ensure it complies with the requirements set by the Canada Revenue Agency (CRA). Donors can easily check an organization’s charitable status on the CRA website or contact them directly. 

Eligible donations include but not limited to:  

  • Financial donations to registered charities. 
  • Donations of assets such as property, stocks, bonds, works of art etc. 
  • Tickets to charitable dinners and events.  

How are charitable tax credits calculated?  

The charitable tax credit is a two-tiered system. Donors receive a federal tax credit and, in provinces that collect income tax, an additional provincial tax credit. The credit is calculated as a percentage of the donation, with the first $200 eligible for a lower rate and any amount exceeding $200 eligible for a higher rate.  

Visit Canada Revenue Agency for more information on the calculation. 

Carrying forward tax credits 

Charitable tax credits are non-refundable, meaning you must claim your other credits first. If that amount is sufficient to bring your tax payable to zero, you can carry forward unused charitable tax credits for up to five years. This flexibility allows individuals to maximize their tax benefits over time. 

How do I claim the tax credits?  

To claim charitable tax credits, you must obtain an official donation receipt from the charity. This receipt serves as proof of the donation and includes essential details such as the name and address of the charity, the amount donated, and the date of the contribution.  

Second Harvest’s online donation platform ensures a seamless process, and you’ll receive your tax receipt via email within minutes. It’s a hassle-free way to give back and support the vision of a hunger-free future. 

Double your impact this holiday season  

We are thrilled to announce that our long-time supporter, The Nikita Foundation, is generously matching donations until the end of the year. That means your $1 donation becomes a powerful force that helps provide over 6 meals for those in need. 

Donate now 

BONUS Tips: If you donate financial assets like stocks or bonds that have appreciated in value, there is no capital gains tax on the gift. You can claim your credit for both the principal and the gain.  

Make a stock donation today!  

The material listed above is intended to provide general information and should not be construed as legal or other professional advice. The above should not be used without first reviewing it with your own legal or other professional advisors to determine its suitability for your unique estate planning situation.

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