For Canadian taxpayers, understanding their tax-deductible expenses is not just about saving money; it’s about supporting the causes they truly believe in. One of the most common and rewarding deductible expenses is charitable giving to a worthy cause. But how exactly does this process work? Are charitable donations tax deductible in Canada?
Charitable donations are tax deductible, but there are some restrictions.
- The charity must be registered with the CRA
- You should obtain a receipt from the donation
- Your yearly charitable donations should be less than 75% of your annual income
If these qualifications are met, you may qualify for a tax deduction for your charitable donation. This means that you can feel free to donate to a worthy cause—come tax season, you’ll be grateful!
Donating to a Worthy Cause
If you’re looking for a worthy cause to donate to, look no further. Regeneration Outreach Community in Brampton, Ontario can benefit from your donation, big or small.
Our organization helps to empower individuals to overcome adversity and achieve a better quality of life with our:
- Essential Care Program, aiming to break the cycle of poverty and give dignity and hope to those in need.
- Health Care Program, aiming to give resources to those in medical or mental distress.
- Community Care Program, building a community based on respect, care, and love.
- Spiritual Care Program, to those in need of spiritual love or a religious community.
- Regeneration Marketplace, where we provide quality food and household items for those in need.
We’re dedicated to supporting our community however we can. It takes a village to support a village, and we believe that nobody should be left behind. When you donate to Regeneration, you’re not only supporting a worthy cause, but you’re also ensuring that those contributions benefit you through tax deductions.
What to Know About Tax Deductions in Canada
Before trying to understand the complexities of charitable donations, it’s crucial to begin with understanding how tax deductions work in Canada.
A tax deduction reduces the amount of your income that’s subject to tax. This means that when something is deducted, you end up paying less in taxes. The most common deductions include, but are not limited to:
- RRSP contributions, which can be deducted up to certain limits
- Childcare expenses, that allow parents to deduct costs incurred from childcare services
- Union or professional dues required for employment
- Moving expenses for those relocating to start a new job or to run a business
- Capital losses, which can offset capital gains and reduce taxable income
For Canadian taxpayers, the most frequently claimed deduction is for charitable donations. You can get a credit on your tax return, and in some cases, it can mean you get a significant chunk of your donation back.
This is due to Canada’s Charitable Donation Tax Credit, which is actually a two-tiered system where you receive some credit for the first $200 of cumulative donations and a higher credit once you surpass that threshold.
What Qualifies for a Tax Deduction?
Under Canadian tax law, a donation includes any cash gift, but also any gift-in-kind, to a registered charity or non-profit organization. Non-cash gifts can include:
- Stocks
- Real estate
- Personal property
- Goods
It’s important to note that only donations to registered charities qualify for a tax deduction. You can easily cross-check if an organization is registered by searching the Canada Revenue Agency’s (CRA) charity listing.
When Are Charitable Donations Tax Deductible?
In Canada, charitable donations are considered tax-deductible if:
- They were made to registered and recognized charities
- The donation has not been previously claimed on any previous tax return
It’s a good practice to get an official donation receipt from the charity for any single donation of $20 or more; these receipts are necessary to claim a deduction. However, if you’ve made a donation through a non-profit organization that also issues official donation receipts, you can claim those as well.
When you donate more than $200 in a single year, you do not have to claim the full deduction that same year. Instead, you become eligible to carry them forward and claim them on any tax return you file over the next 5 years.
How to Deduct a Charitable Donation from Your Taxes
If you’re planning to deduct a charitable donation from your taxes, there are a few steps involved. To claim the donation:
- Ensure you have your donation receipt ready
- Make sure you have the charity’s registration number readily available (you can find it here)
- Enter the total amount of your donations on Schedule 9 of your tax return
- Attach the Schedule 9 to your federal tax return
- Remember, if you’re claiming donations made by both you and your spouse or common-law partner, it’s often more beneficial to combine your donations on one tax return.
Make sure you fill out any and all information accurately. If you have multiple receipts, the government website’s software will automatically combine the total for you.
Make the Most of Your Donation
Donating to a charity is not only a generous act of goodwill but can also have positive implications for your tax return. By donating to a registered charity like ours at Regeneration Outreach Community, you aren’t just helping improve a life—you’re helping your own financial bottom line as well. Contact us today to learn more about how you can make a difference, and yes—your donations are tax-deductible!
