People donate their time and money for many reasons, often to support a specific cause or research initiative, or simply to give back to the community.
According to Statistics Canada, Canadians donated an average of $446 in 20101 and 94% of Canadians 15 years and older donated material goods, food or money.
The Canada Revenue Agency (CRA) reports that there are more than 160,000 charities and non-profit organizations across the country, making it tough to know which one to support. Start by finding a cause you’re passionate about, and keep in mind that the most effective organizations spend around 75% of donations, sometimes more, to fund their programs.
Before choosing an organization, make sure it’s legitimate. The Government of Canada's regularly updated List of charities External link. Opens in a new window. can help you make an informed decision. There, you’ll find contact information, a description of what the charity does and even an overview of their finances, including the public portion of their annual information returns.
Bring on the tax benefits
Whether you’re donating money, food or equipment, there’s no doubt that giving feels good. But did you know that the federal and provincial governments also give donors tax credits for the amount they donate?2
And not just for cash donations! You can get a credit for donating shares, life insurance, artwork or other kinds of property, including publicly traded securities such as stocks, bonds and mutual funds. That’s why donating doesn’t just benefit the recipient—it benefits you, too! Not only will you get a credit, but you’ll be exempt from taxes you’d otherwise be paying on capital gains.
You can also leave charitable donations in your will. To maximize your tax benefit, the person in charge of settling your estate (the “liquidator” or “executor”) can split your donation over your last two income tax returns and the estate's income tax returns following your death. Among other things, you can choose to donate all or part of your RRSPs and RRIFs.
What’s more, certain donations are eligible for an even higher credit. And because you can benefit from a tax credit3 and exemption at the same time, you can end up reducing the net cost of your donation by almost half. You don't have to give a lot to get a lot—even donating just $20 can save you money on your taxes.
A closer look at the tax benefits
As a donor, you can claim a non-refundable tax credit when you file your return.
See the table below for applicable rates.
|Non-refundable tax credit rates for donations||Federal4||Quebec||Ontario|
|First $200 in donations||15.00%||20.00%||5.05%|
|Donations over $200||11.16 %|
|- Taxable income below $210,372 (federally) or $106,556 (in Quebec) in 2019 ||29.00%||24.00%|
|- Taxable income above $210,372 (federally) or $106,556 (in Quebec) in 2019||33.00%||25.75%|
- Couples can combine their donations on a single tax return to maximize their tax credit.
- You also don’t have to claim the tax credit in the same year you made the donation—you can carry them forward for up to 5 years.
- Study Charitable giving by Canadians External link. Opens in a new window..
- Generally, you can get a federal and Ontario tax credit for up to 75% of your net income (100% if you pass away before the credit is claimed). In Quebec, there’s no limit.
- For example, Quebec farmers who donate food to recognized organizations are given a credit for 50% more than the amount they donated. Ontario calculates this differently, and instead increases this group’s tax credit by 25%.
- Due to the 16.5% provincial tax abatement, the rates in this column for Quebec residents are 12.53%, 24.21% and 27.55% respectively.