***It is recommended you speak with your accounting professionals and financial advisors to completely understand how a donation could affect your own unique situation. Also visit the CRA website for CRA’s tax savings calculator tool. Donors to this project will receive an official donation receipt from the County of Grande Prairie. ***
PERSONAL TAX CREDITS
Donations made to registered charities, registered Canadian amateur athletic associations, Canadian municipalities, the federal government or a provincial government are eligible for a tax credit. Donations can only be claimed after they are paid— pledges don’t count. Unused claims may be carried forward for up to five years. The general annual limit on charitable donations as a percentage of net income is 75%. Donations must be supported by official donation receipts.
Generally, the federal credit is 15% on the first $200 of donations claimed in the year and 29% on the amount in excess of $200. In Alberta, the provincial tax credit is 21%. So the combined tax savings on a donation over $200 in Alberta is 50%. So if an individual made a donation of $10,000, he would save $4,950 on his personal income tax return. For 2016 a new federal tax credit rate of 33% will apply to donations above the first $200, when an individual has income over $200,000.
The 2013 federal budget introduced a new temporary First-Time Donor’s Super Credit which permits first-time donors an additional 25% federal tax credit on up to $1,000 in donations. This one-time credit may only be claimed once in the 2013 to 2017 taxation years. You are considered a “first-time donor” if neither you nor your spouse claimed a charitable donation tax credit in any of the five previous years.
Donating from a business is different for tax purposes than donations made personally. Donations are essentially an expense to the company. If a company is in a loss year, the donations are carried forward and deducted in a year where there is taxable income. For example, if a company donated $10,000, and its corporate tax rate is 13.5%, then the tax savings would be $1350.