Charitable Donations

 

Only Canadian registered charities or other qualified donees may issue official donation receipts that qualify for charitable tax credits.

Canada Revenue Agency has a list of Canadian Charities called the Charities listing on their website where you can confirm if a charity is registered under the Income Tax Act and therefore eligible to issue donation receipts.

Also you can view a charities financial information online at as all registered charities are required to fill out a return each year and submit it to the Canada Revenue Agency

Associations 

 

• Firefighters

• Police associations

• Amateur sports associations

  
  

A number of my clients get phone calls from various police, firefighters or amateur sports associations throughout the year asking for donations for various events which are taking place.  

 

Scams or Real – check with CRA to confirm

Sometimes these are scams and other times these events may be real but some of these associations are not registered charities which means the receipt they give you cannot be used for tax purposes for individuals which is clearly printed on their receipt, they can be used for business purposes and treated as advertising or marketing expense.

Canada Revenue Agency also has a list of registered Canadian amateur athletic associations some of these have had their registrations revoked or suspended.   

Examples of some scams in recent years.

• RCMP warns of scam in Central Manitoba 
• Thunder Bay Canadian Police Association scam 
• RCMP Fallen Members scam 

Some things you could do to protect yourself from charity scams:

 

• Bewary of schemes that promise you tax savings greater than your cost, thus allowing you to “profit” from giving to a registered charity.
• Ask the solicitor for the registered charitable tax number of the charity
• Be wary of appeals that tug at your heart strings, especially pleas involving current events.
• Confirm the charity’s registration information through the Canada Revenue Agency (1-800-267-2384) or online.
• Be skeptical if someone thanks you for a pledge you don’t remember making.
• Avoid cash gifts. Cash can be lost or stolen.  It’s always best to pay by cheque, or credit card as proof of payment, along with an official donation receipt may be requested by Canada Revenue Agency to support your claim.
• Refuse high pressure appeals

 

If you think you have been scammed call the Canadian Anti-Fraud Centre (Formerly PhoneBusters) at 1-888-495-8501.

 

Donation Receipts

 

What information is on an Official Donation Receipt

• a statement that the receipt is an “official receipt for income tax purposes”;
• your name and address;
• the charity’s Business Number (BN)/Registration Number;
• the amount of the cash donation or the fair market value of the non-cash donation;
• the date of the donation (the year is sufficient for donations of cash);
• the Canada Revenue Agency’s (CRA’s) name and Web site address (www.cra.gc.ca/charities); and
• a unique serial number.

 

Tax Tip

 

Donations of Publicly Traded Shares

Normally, disposition of shares will result in a capital gain if the fair market value is greater then your cost however, if the shares are donated to a charity the taxable portion of the gain is reduced to nil so that there is no capital gains tax payable.   It’s important to note that you have to donate the shares directly to the charity – you can’t sell them first and donate the cash as this will trigger a capital gain and result in tax cost to you.   The charity will issue you a tax receipt for the fair market value of the shares at the time of donation.

 

Donations above $200 

Total eligible amounts above $200 qualify for a higher tax credit, and you can claim a donation up to five years after you’ve made it. This allows you to maximize your charitable tax credits by combining donations made over several years. You can also combine your receipts with those of your spouse or common-law partner.

 

Donations of Cultural Property

You do not have to report a capital gain when you sell or donate certified Canadian cultural property (national treasures) to an institution or public authority designated by the Minister of Canadian Heritage. The Canadian Cultural Property Export Review Board certifies this property as cultural property and will give you a certificate for tax purposes. Cultural property can include paintings, sculptures, books, manuscripts, or other objects.

 

Tax savings on Charitable Donations

In order to save money on your personal or corporate taxes you must have taxable income and be paying income taxes.   As donations are a tax credit and not a tax deduction.   Canada Revenue Agency has a new Tax Savings Calculator on their website which will estimate the amount of tax credit you will save based on your donation amount.

 

US charaties can only be claimed against US income. 

You can claim the eligible amount of your U.S. gifts up to 75% of the net U.S. income you report on your Canadian return.

However, you may be able to claim the eligible amount of your gifts to certain U.S. organizations up to 75% of your net world income. You can do this if you live near the border in Canada throughout the year and commute to your principal workplace or business in the United States, and if that employment or business was your main source of income for the year.

 

 

Accounting and Tax Services

 

If you need assitance with your personal or corporate tax returns I would be pleased to be of service to you.   Please contact me at (416) 398-1700 or via my contact form http://samseidman.com/contact-us

Also you can click the Contact Sam button below to get in touch with me.