Canadians mostly donate to charities out of compassion for those in need — or at least that's what we said when asked about our top reasons for giving in a recent Statistics Canada survey.
But those who are less motivated by such noble feelings might be enticed to give by the promise of a tax break. The federal government offers a number of tax incentives for generous Canadians who open their wallets for charity.
People donate to charities because they want to have a sense that their money is going to a purpose they personally believe in, said Adrienne Woodyard, a partner at law firm Davis LLP in Toronto.
"Everyone knows that tax dollars are used to fund a broad range of social programs, but charitable giving allows people to have a much greater degree of control over how their money is used and enables them to leave a legacy behind that may have profound benefits for future generations," she told CBC News.
Here are some things you should know about making charitable donations in Canada.
1. Give generously
Canada has a two-tiered credit system, which means you get a 15 per cent non-refundable federal tax credit for the first $200 of donations for the year (in total, for all charities). Donations beyond that $200 threshold will give you a 29 per cent federal tax credit.
On top of that, each province offers its own tax incentives (amounts vary depending on where you live) that can be claimed in addition to federal credits.
For example, if you live in Prince Edward Island, you'd get a provincial credit of 9.8 per cent for donations up to $200, and 16.7 per cent for donations above that. So in total, that means you can claim 24.8 per cent for up to $200, and 45.7 per cent for donations beyond $200.
To claim charitable donations, you need to have official receipts that show the charity's Canada Revenue Agency registration number. The most you're able to claim in a year is 75 per cent of your net income. In the year of a person's death and one year prior, the limit for donations is 100 per cent of the deceased's net income.
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