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Holiday giving: Smart ways to maximize your charity donations
Published Monday, December 19, 2016 6:00AM PST Last Updated Monday, December 19, 2016 7:38PM PST
Around 70 per cent of Canadians donated to charity this year with the holiday season one of the busiest times for giving. But did you know that the generosity comes some tax benefits?
Donating to charity can be a win-win: not only is it a great way to give back and make a difference, but it can also reduce your tax burden.
Canada has a two-tiered charity tax credit system. You get a 15 per cent tax credit on the first $200 you donate, and donations above that will give you a 29 per cent tax credit.
“Effectively you double your tax credit. So if you can pool them together with a spouse or by carrying forward for a couple of years you can actually get a larger tax credit back,” said John Cindric, financial advisor with BlueShore Financial.
Here are some ways to maximize charity tax breaks:
Time Your Donations
You can carry forward donations for up to five years. By holding off claiming your contributions you can take advantage of the higher credit.
Pool Your Contributions
You can also pool your donations with your spouse to reduce the tax on the higher income partner.
Maximize Your Super Credit
If you're a first time donor, you qualify for a "super credit". That's an extra tax credit of 25 per cent on your $1,000.
"The definition of a first time donor, whether it's yourself or a spouse, is if you haven't donated since 2007," said Cindric.
And of course you want to avoid scams, so only donate to registered charities. Some so-called charities will claim to give you a credit for more than you actually donated. But if it seems "too good to be true" it probably is.