What qualifies as a charitable gift?
Charitable gifts include:
- Canadian registered charities
- Registered Canadian amateur athletic associations
- Prescribed universities outside of Canada
- Certain tax –free housing organization in Canada
- Canadian municipalities
- The United Nations or its agencies
- Charities outside of Canada to which the Government of Canada has made a donation in the year or preceding year
- Crown gifts
- Cultural gifts
- Ecological gifts
How to compute?
(AxB) + C(D-B)
A = 15% (Current federal tax credit rate for the year)
B = First 200 dollars of the total gift
C = 29% (Highest federal tax bracket for the year)
D = Individuals total gift
Limitations and carry forwards
This credit is only limit to 75% of the taxpayer’s net income. If the eligible donation in one year exceeds the taxpayer’s 75% of net income, then the excess amount is carried forward to the next 5 years. The carried forward amount is then claimed first before any additional amounts can be claimed.