Food Banks Canada CEO and CanadaHelps CEO on importance of Giving Tuesday
As many Canadians choose to make charitable donations on Giving Tuesday, personal finance experts say there are some things taxpayers should keep in mind.
WHAT IS GIVING TUESDAY?
Giving Tuesday is a charitable movement occurring each year on the day after Cyber Monday, with the idea of donating funds saved during Black Friday and Cyber Monday.
CHARITABLE DONATIONS AND TAXES
Charitable donations can be reported to the Canada Revenue Agency, and donors can claim tax credits when filing income tax returns.
WHAT SHOULD TAXPAYERS KNOW?
Jessica Moorhouse, a financial counsellor and host of the “More Money” Podcast, told BNNBloomberg.ca that taxpayers do not always have to claim all of their donations.
“Once you donate over $200, you are eligible to carry that amount forward and claim them on your tax return for this year, or up to five years, so there's some flexibility there,” she said in an interview.
“Especially if you want to get the most bang for your buck, you may want to wait until they accumulate to a higher amount because the more you donate, you get a better tax credit rate.”
Moorhouse said that when it comes to the charitable tax credit, it’s important to remember to keep receipts, while those who donate should be aware that provincial tax credits differ between provinces.
She said that before donating, it is also important to ensure the charitable organization is actually able to give a tax credit.
“A lot of people get confused nowadays because there are things like GoFundMe and stuff like that that do not qualify because you're just giving it to a person,” she said. “In order to get that tax credit, you have to make sure that the organization you're donating to fits within the eligibility rules.”
She also highlighted that many people are not aware that you transfer donation credits to a spouse or common-law partner.
“So this may make sense if you don't owe any taxes but they do, you can transfer it over to them. So they can claim that and make the best use out of those donations for tax time,” she said.
Barry Choi, a personal finance and travel expert, told BNNBloomberg.ca on Tuesday that those who file taxes with a partner can pool donations, which allows the person with greater taxable income to receive a larger tax credit.
HOW IT WORKS
Choi said by email that those who donated in 2023 can collect official tax slips for when they file their taxes. He said following a donation, some charities will mail a paper receipt and others may require the donor to download one.
However Choi added some charities may not “automatically issue a receipt,” and donors may have to request one.
Charitable donations provide a tax credit, he said, which differs from Registered Retirement Savings Plan (RRSP) contributions that lower taxable income.
According to Choi, taxpayers could receive a 15-per-cent tax credit on the first $200 in donations and 29 per cent on donations above that threshold.