HERBERT & COMPANY
Chartered Professional Accountant
Tip of the Week
You are able to claim charitable donations on your personal tax return to help reduce the amount of tax owing. To be able to claim the donation, you must have the official receipt and it must contain the statement "official receipt for tax purposes" in order for it to be valid and include the registered charitable organization number.
The federal tax credit available on charitable donations is 15% on the first $200 and 29% on amounts above that. The provincial portion of the tax credit is 10% on the first $200 of charitable donations and 21% on amounts above that. Donations can be accumulated and claimed in one year to take advantage of the higher tax credit rate on donations over $200.
Generally, charitable donations of $500 for the taxation year would have the following tax savings:
Federal: $200 x 15% = $30
$300 x 29% = $87
Total Federal Tax Credit: $117
Provincial: $200 x 10% = $20
$300 x 21% = $63
Total Provincial Tax Credit: $83
Total Tax Credit available on $500 of Charitable Donations = $200
UPDATE: Effective for 2023, the Alberta Provincial Government has increased the provincial deduction to 60% for the first $200 of donations and then back to 21% for donations over $200.
CRA does limit the amount of charitable donations claimed in a taxation year to 75% of your net income reported on line 236 of your personal tax return. However, if you report charitable donations in excess of 75%, you are able to carry the excess amounts forward for 5 consecutive years.
Questions? Call or email today!