The feds have a relatively unknown tax credit that should make people pause when considering how to claim charitable donations over the next couple of years. The “First Time Donor's Super Credit” (FTDSC) is an incentive to donate to a registered Canadian charity that was introduced in 2013 and runs through 2017, and it will boost the regular donation tax credit allowed by the Canada Revenue Agency (CRA) by another 25%. This tax credit is nearing the end of its run, so unless they extend it... you only have one year left to get an enhanced tax credit just for donating to your favourite charity.
How regular donations work on your tax return
You get a credit of 15% of the amount you donate up to $200.00
You get a credit of 29% of anything you donate that is more than $200.00
How the donation “Super Credit” can boost the donation claim
25% is added to the normal amounts listed above.
You get a credit of 40% of the amount you donate up to $200.00
You get a credit of 54% of any donations in excess of $200.00
So let's do some math. The regular tax credit for someone who donates $500.00 to a registered charity would be $117.00, but for those who can claim the new FTDSC, that same $500.00 donation would be worth $242.00. That's a significant increase!
To qualify, neither you nor your spouse can have claimed donations since 2007. Only donations made AFTER March 20th, 2013 will qualify for the new credit. And only cash donations will qualify, so if you donated your car to charity or made some other “in-kind” donation, you will still get the regular donation tax credit. Only donations of money qualify for the FTDSC. The FTDSC is limited to $1,000.00.
There are lots of rules – but the important thing to know is that if you haven't claimed donations at any point since 2007, you can still get a much higher tax credit in 2016/2017 if you claim the First Time Donation Super Credit. It's nearing an end... so why not take advantage of this incentive before it disappears!
– Wayne Blackmere, Liberty Tax Franchisee