Charitable Donation Tax Credit

Are you looking to make a charitable donation? Well this tax tip might be just for you!

The last day in the year to make a donation and receive a tax receipt is December 31st. Tax laws provide both federal and provincial donation tax credits that together can result in tax savings of up to 50% of the value of the donation. Consider making a donation by the end of the year to reduce your tax bill.

First time donors can also claim the First-Time Donor’s Super Credit (FTDSC) if the individual and their spouse/ common-law partner have not claimed the donation tax credit after 2008. This credit gives the donor an additional 25 percent tax credit on total monetary donations up to $1,000.

Individuals may also gift publicly-traded securities to a registered charity which entitles them to a tax receipt for the fair market value of the donated security, and also eliminates capital gains tax. If you have a property with accrued capital gains, consider making a donation by the end of the year to avoid paying capital gains tax.

So here’s the tip:

By making charitable donations by the end of the year, you can lower your capital gains tax on any gains in your investment portfolio with the help of the charitable donation tax credit.

ABOUT THE AUTHOR

ALLAN MADAN

CPA, CA

Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.

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