Are you an individual considering donating money or other assets to a registered charity or other qualified recipient?
Do you possess land, a building, stocks, or bonds that you intend to donate to a registered charity or other qualified recipient?
Do you own valuable items such as oil paintings, stamp collections, etchings, sculptures, antiques,
or coin sets that you wish to donate to a gallery or museum that is a qualified recipient?
Are you planning to have your donation appraised?
If yes, the choices you make could impact your tax circumstances.
If you have made a donation of money or other assets to a qualified recipient, such as a registered charity,
you may be eligible to claim federal and provincial or territorial non-refundable tax credits when you file your income tax and benefit return, provided that you receive an official donation receipt from the qualified recipient.
If you resided in Quebec on December 31, you should claim your provincial tax credit on your Quebec income tax return.
In most cases, a gift refers to a voluntary transfer of property without receiving valuable consideration in return.
However, a transfer of property for which you received a benefit is still considered a gift for the purposes of the Income Tax Act,
as long as the Canada Revenue Agency is satisfied that the transfer of property was made with the intention of gifting.
The fact that you received a benefit will not automatically disqualify the transfer from being considered a gift
if the fair market value of the benefit does not exceed 80% of the fair market value of the transferred property.
Here is a list of qualified recipients:
Registered charities;
Registered journalism organizations;
Registered Canadian amateur athletic associations;
Registered national arts service organizations;
Registered housing corporations resident in Canada established solely to provide affordable housing for seniors;
Registered municipalities in Canada;
Registered municipal or public bodies performing governmental functions in Canada;
The United Nations and its agencies;
Government of Canada, a province, or a territory;
Universities outside Canada whose student body typically includes Canadian students and are registered with the CRA;
Registered foreign charities to which the Government of Canada has made a gift;
Before donors make a donation, please verify if the recipient appears on the publicly available lists maintained by the CRA.
The United Nations and its agencies, as well as the Government of Canada, a province, or territory, are not listed because they automatically qualify.
Donations made to US-based charities can only be claimed against income earned in the United States.
You can claim up to 75% of your net U.S.-source income reported on your Canadian tax return as the eligible amount of your U.S. gifts.
For instance, if Mr. X donated to a US organization but did not earn any income from US sources,
he cannot claim the donation against income earned in Canada.
A taxpayer can claim donations made in the current year as well as any carry forward donations from the previous five years.
The eligible limit for claiming the donation can be up to 75% of the taxpayer's net income for the year, except in the year of death and the preceding year,
where the limit is increased to 100%. Donations made by the taxpayer's spouse can also be claimed, and combining donations can maximize the benefit.
If you contribute cash or other assets to a registered charity or other qualified recipient during the year,
your total donation limit will typically be 75% of your net income for the year.
However, you can expand your total donation limit by donating capital property during the year.
The donation credit is structured as follows:
15% credit applies to the first $200 of total donations.
A 33% credit applies to the lesser of:
The amount of donations for the year exceeding the initial $200.
The amount of taxable income over $216,511 (2021) or $221,708 (2022).
A 29% credit applies to the total donations for the year exceeding the initial $200, which do not qualify for the 33% rate mentioned above.
If the donations are small, it might be beneficial to accumulate them over several years to qualify for a higher tax credit for donations exceeding $200.
A taxpayer can report donations made in the current year along with any donations carried forward from the previous five years.
Hospital lottery tickets cannot be claimed as charitable or medical expenses.
Meanwhile, political contributions cannot be claimed as charitable donations.