Everyone has their own reasons to give charitably, so this article will focus on making the most of your donations for tax purposes.
Donation credits are two tiered in our tax system. All donations are considered non refundable tax credits. For British Columbia donations up to $200 will receive a 19.59% (combined Federal and Provincial) tax credit and all amounts over $200 you will receive a 43.7% (combined) tax credit as per tax tables from Canada Revenue Agency. If you save up multiple years of donations you can use the $200 threshold to your advantage. First time donors are eligible for a super credit on $1000 of donations which is essentially an additional 25% tax credit on both tiers for donations made between March 20, 2013 and December 31, 2017. See calculator http://www.cra-arc.gc.ca/chrts-gvng/dnrs/svngs/clmng1b2-eng.html.
If you and your spouse donate separately you still can combine all donations made by you and your spouse on one return to take advantage of the second tier.
You can donate other than cash to charities as gifts in kind such as securities and real estate or artwork the fair market value for these items is the same as giving cash. There are advantages to gifting these other forms of capital as any gains from adjusted cost base are not included in the donor’s tax return. Donating securities is better than selling the securities and donating the cash because if you sell the securities you will be responsible for the capital gains.
Life insurance donations can include tax credit for a policy assigned during the policy owner’s lifetime that has a cash surrender value. If a beneficiary of the policy is the charity your estate will be issued a tax receipt and is a great method to reduce tax payable on death.
Verify if the charity that you plan on leaving bequests to are eligible and have a qualified status by Canada Revenue Agency.
To be eligible for tax credit for your 2016 tax return you must donate by December 31, 2016.
This article was prepared solely by Mark Nichol, Roy Collings, and David Storrie who are registered representatives of HollisWealth® is a division of Industrial Alliance Securities Inc. (iA Securities), a member of the Canadian Investor Protection Fund (CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC). iA Securities is a trade name and business name under which Industrial Alliance Securities Inc. operates. The views and opinions, including any recommendations, expressed in this article are those of Infinity Wealth alone and not those of HollisWealth. The comments contained herein are general in nature and professional advice regarding an individual’s particular situation should be obtained in respect of any person’s specific circumstances. HollisWealth and the Industrial Alliance Securities Inc. (iA Securities) companies do not provide income tax preparation services nor do they supervise or review other persons who may provide such services. Infinity Wealth is a personal trade name of Mark Nichol, Roy Collings, and David Storrie.