Canadians have many reasons to make a charitable donation. Along with a strong sense of knowing you’ve made a difference, your donation can also provide a tax break. Individuals or corporations who support Write to Read BC projects are likely eligible for a substantial tax credit¹. Tax credits reduce the income tax you pay.
You can claim charitable gifts and gifts to the Crown, up to 75% of your net income. When you donate eligible amounts, you can claim:
- an income tax credit (deduction from taxes payable) in the case of an individual.
- a reduction in taxable income in the case of a corporation.
Example after-tax cost of a donation
For example¹, your $1,000 cash gift produces this result for a taxpayer in the province of BC:
Federal tax²
17% on the first $200.00 is $34.
29% on remaining $800.00 is $232.BC tax²
Calculated at 51% of Federal tax, which is reduced by the $266, results in a further credit of $136.Total federal and BC tax credit is $402.
Gifts of certain appreciated capital property have special rules. In some cases such gifts may be more beneficial to you as taxpayer than those in cash². In general, the credit or the deduction is based on the market value of the property, and you include only half (normally 75%) of the taxable capital gain in your income¹. Additionally, you can usually claim donations that exceed your annual limit in the five years that follow¹.
Donors in other tax jurisdictions can usually benefit from similar tax credits, ranging from 4% to 20%. The maximum donation credit you can claim is 75% of your net income for the year.
¹ None of this is tax advice. This is intended only to inspire you to investigate your options as a donor. Obviously, you must get tax advice from a qualified professional. Or you can read Canada Revenue Agency’s guidance about tax credits. Of course, if you want a quick sense, try an online calculator to estimate the combined federal and provincial or territorial after-tax cost of your charitable donation.
² At the current, maximum tax rate for a BC resident, when the cash gift is within your allowable limit as taxpayer.
