Now that the end of the year is approaching, many people have been reviewing their annual to-do lists to see which items are still remaining. For many, making a charitable donation is still on the list.
Choosing a charity
When it comes to giving, some people have specific criteria they use to decide which organizations they would like to support during the year. They may have a family member or friend who was supported by a certain charity. Or they may have a specific cause such as feeding the hungry or protecting the environment. Others will instead choose to donate to causes based on emails they receive from friends and family, asking for pledges for runs, walks or climbs up the CN Tower.
If you’re just starting to give and want to make a more informed decision about the charities you’ll support, you might want to check out Moneysense magazine’s, Canada’s top-rated charities. They’ve put together a comprehensive list using specific criteria which includes, among others, fundraising efficiency and staff compensation.
First-Time Donor’s Super Credit
Once you’ve decided which charities you’d like to support, it’s good to know that the Canada Revenue Agency will be rewarding you with an extra tax credit if you are a first time donor. Established in 2013, the First-Time Donor’s Super Credit (FDSC) is a temporary tax credit that will be added to the existing credit in the first year you make your donation. Between 2013 and 2017, individuals who are first-time donors will receive a 40% federal tax credit for donations of $200 or less, and a 54% federal tax credit for donations over $200 and up to $1,000.
If you’re all set to donate but your money is tied up in investments in your brokerage account, you might want to consider donating securities instead. The Canada Revenue Agency has eliminated the tax on any capital gains that occur when you donate publicly traded securities to a registered charity. For example, let’s say you own shares of Bell Canada that you purchased for $5,000 and they are now worth $10,000. If you donate these shares to charity, not only will you receive a tax credit for your donation but you also won’t have to pay any tax on the $5,000 gain on the shares.
Whether you give one hundred dollars or one hundred thousand dollars, make sure your year-end to-do list includes some research to help you better direct your charitable giving. Get started by checking out the CRA’s Charities Listings.
Marcy Ages is a passionate, detail-driven provider of financial planning services, including investment management and tax preparation. As founder of The Care Network, Marcy also works with other service professionals to support high-net-worth individuals with their estate planning and assisted living issues.