How To | April 25, 2022

Your charitable tax credit questions answered

Find out more about the charitable donation tax credit and how it can apply to you. 

We are late into Tax Season 2022. You might be hit with mixed emotions of stress, anxiety, or even pride in your superhuman accounting accomplishments on this year’s return! 

Many Canadians recently searched online for information on home tax credits, tuition credits, and the newly implemented digital news subscription tax credit. Not to be overlooked is the charitable donation tax credit, especially since Canada has one of the most generous charitable tax credit programs in the world. 

Depending on how much you give and your territory or province of residence, you may be able to get nearly 50% of your charitable donation back in your pocket—allowing you to give or spend more. Before we hit the April 30th deadline, we wanted to share some key questions and answers on how to claim your charitable donation credits in your tax return.

Tax time charitable FAQs

Question: Who can claim charitable tax credits?

Answer: Anyone who gives to a Canadian registered charity can claim their charitable tax receipts towards tax credits. 

Q: Where do I claim on my tax return?

A: You can claim donations in the Donations & Gifts section of your income tax return. 

Q: How much credit will I receive?

A: The federal government provides 15% on donations totalling $200. On donations totalling over $200, the federal government’s credit rate goes up to 29%.

Provincial and territorial tax credit rates vary from about 4% to 24%. To find out more about the tax credits available in your province or territory, you can check the Canada Revenue Agency’s charitable donation tax credit calculator (say that 5 times fast!). 

Q: Can I pool donations with others or over several years? 

A: If you are filing your taxes with your spouse or common-law partner you can pool donations in order to receive higher tax credit rates. You can also claim any donations from within the previous 5 years, if these have not previously been claimed on your tax returns.  

Q: Do I receive tax credits right away?

A: Tax credits can be carried forward to any tax period within the next 5 years. 

Q: How do I keep my tax receipts organized? 

A: You might have your own filing system but a donor-advised fund, like Charitable Impact, could be the best way to keep your giving organized. An Impact Account provides you with an immediate tax receipt when you add money to your account and these are stored in your account.

Charitable Impact takes care of the organizational details around giving, like organizing tax receipts and tracking activities, so you can focus more on how to use your charitable dollars—and less on managing administrative details. Each gift you send is recorded in your account as part of your giving history, providing a view of your impact over time.

Q: How long should I keep tax receipts? 

A: The Canada Revenue Agency recommends that you keep tax receipts for up to 6 years in case of an audit. With Charitable Impact, all your receipts will remain stored in your account. 

Q: Can I claim tax receipts from previous years? 

A: You can claim any unclaimed tax receipts from within the previous 5 years.

Q: What is the most tax-effective way to give?

A: Giving appreciated publicly traded securities in kind is a more cost-effective way to give than cash because capital gains tax is eliminated. You will also access charitable tax credits for the value of your donation. 

Get in touch for more information on giving securities or other non-cash assets through Charitable Impact. 

A: Do all charities issue tax receipts? 

A: Not all charities issue tax receipts in the same way. Some charities may deliver receipts via snail mail, while others issue receipts by email. Some charities may have a minimum donation threshold for issuing receipts. 

With Charitable Impact, you receive an immediate tax receipt when you add money to your Impact Account—starting with donations of $5. 

Q: How does Charitable Impact issue tax receipts to donors?

A: Charitable Impact operates as a donor-advised fund. When you add money to your Impact Account you’re actually making a donation to Charitable Impact Foundation, a registered charity and public foundation. 

Through an Impact Account, you have access to one place to manage all of your giving. You will receive an immediate tax receipt whenever you add money to your Impact Account, even if you haven’t yet decided which charities to support. You can keep funds in your Impact Account until you decide where you’d like to send charitable dollars, including to charities, Giving Groups, or friends and family.

Find out more about the benefits of claiming your charitable tax receipts and how to easily manage your giving through a donor-advised fund, like Charitable Impact. 

 

We hope you find this material useful in learning about giving. However, you should never use this material without first reviewing it with your own lawyer(s) and tax advisor(s) to determine its suitability for your circumstances. This material is not legal, tax or other professional advice.

Charitable Impact centralizes all your tax receipts in one accessible place, making it easier to find, download, and submit your receipts towards tax credits. Remember, you can manage all your charitable giving on the go with the Impact Account app. It’s one app for all your giving. Download your Impact Account app now for your iOS or Android device.

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