TAX TREATMENT OF CHARITABLE DONATIONS

TAX TREATMENT OF CHARITABLE DONATIONS1
 
This text is intended to encourage individuals who wish to make a donation to charitable organizations, particularly the Fondation Adapte-Toit, which is particularly important to us.
 
The charitable donation tax credit
 
For individuals with taxable income not exceeding $200,000 this credit is equal to 15% of the first $ 200 of an annual donation and 29% of a donation amount exceeding $ 200. In the event an individual has taxable income in excess of $200,000, a portion of the donation will be eligible for a tax credit of 33%.
 
Here is an illustration of the mechanics of calculating credit for donation:
 
Amount of eligible donation 
 
The eligible amount of a donation for a year is generally the fair market value of the donation minus the value of any benefit received in return. For example, if a person donates $ 1,000 to a ballet school without obtaining anything in return, the eligible amount of their donation will be $ 1,000. However, if the same person receives tickets for one of the shows produced by the ballet school with a value of $ 150, the eligible amount of the donation would be $ 850.
 
What types of donations qualify for credit?
 
The credit may be claimed for any gift made to a qualified recipient. You will then receive an official receipt showing the eligible amount of the gift in question.
 
Examples of qualified recipients include2:
 
• registered charities;
• Canadian registered associations;
• registered national arts service organizations;
• registered housing corporations in Canada that have been established solely for the purpose of providing low-cost housing for the elderly;
• registered Canadian municipalities;
• registered municipal or public bodies performing a government function in Canada;
• United Nations and its agencies;
• registered universities located outside Canada, prescribed by regulation, which usually include students from Canada;
• Her Majesty in right of Canada, a province or a territory;
• Prior to June 23, 2015, any registered charitable organization located outside of Canada whose name appears on the list of works that have received a gift from Her Majesty in right of Canada. For gifts after June 22, 2015, any registered foreign charity to which Her Majesty in right of Canada has made a gift.
 
Deferral of donations to future years
 
An individual is under no obligation to claim a donation credit for the year in which the gift was made. It is possible to apply for the credit you are entitled to on your income tax return for any one of the following five years.  If you have any questions, please do not hesitate to contact our business and tax law experts.
 
Tétreault Sauvé Lauzon
 
 
1 This text is intended to provide an overview of the basic rules surrounding charitable donations.
2 You can access a list of qualified recipients at the following addresses: arc.gc.ca/listesbienfaisance and arc.gc.ca/chrts-gvng/qlfd-dns/menu-fra.html
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