Did You Know? The Canada Revenue Agency has some good news for charitable organizations, and for taxpayers who haven’t been taking advantage of their charitable donation tax credits in recent years.
Starting with the 2013 taxation year, individuals who have not claimed a charitable donation tax credit in the previous five years will receive a bonus 25% credit on donations up to $1000 that they make in any one year between now and 2017.
Without the Super Credit, a charitable donation of $700 would receive CDTC of $145 (15% of the first $200 and $29% of the remainder.) The First Time Donor’s Super Credit raises the total non-refundable tax credit by 25%, another $175. The total credit received for a $700 donation would be $320.
For individuals, keeping track of charitable donations pays better than it used to. Many people make donations, but never request a receipt, or just don’t bother reporting them because they’re “small potatoes”. Well, the potatoes will be a little larger in one year, making it a tiny bit easier to keep the government’s hand out of your pocket!
For tax preparers, the change is a single line on the tax return that calculates the credit. There are only a couple of small things to remember about it:
1) Like the CDTC, the FDSC is non-refundable. The maximum donation allowable is $1000.
2) It can only be claimed once, in the first year that the CDTC is claimed between 2013 and 2017.
3) The Super Credit is only available for financial contributions to charity. You cannot claim services or goods donated.
4) Only taxpayers who have not claimed a CDTC in the previous five taxation years qualify for the Super Credit.
5) The credit can be shared between spouses, just like the CDTC.
To use the CRA’s online calculator to see how much the First Time Donor’s Tax Credit could affect a tax return this year, visit the online calculator. For a complete description of the new credit, visit the CRA website.