With the Dec. 31 donation deadline fast approaching, you better hurry if you plan to make a charitable gift this year and want to claim it on your 2014 tax return.
Here’s a review of the basic rules to maximize the tax benefits associated with your charitable giving:
— You can claim a federal non-refundable tax credit of 15% for the first $200 of annual charitable donations. The federal credit rate jumps to 29% for cumulative donations above $200. When provincial credits are added to the federal ones, your total credit can be as high as 50%, depending on your province of residence.
— If you are considered to be a “first-time donor,” you can take advantage of the temporary First-Time Donor’s Super Credit (FDSC), introduced last year, which provides an additional 25% non-refundable tax credit on up to $1,000 of donations. A first-time donor is someone who hasn’t claimed a donation credit after 2007. If you’re married or living common law, neither you nor your spouse qualify if either of you has made a donation after 2007. Only cash donations will qualify for the FDSC as opposed to donations “in-kind.” The FDSC can only be claimed once, in any one of the tax years from 2013 until 2017, inclusive.
The FDSC could be particularly helpful to recent graduates who are starting their first jobs and may have never claimed a donation credit in prior years’ tax returns since the combination of the basic personal credit, tuition, education and textbook credits were sufficient to reduce their tax payable to zero while in school.
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