Donate Once, Help Twice
Donations to charity can really help the people in need, it can also help reduce you income tax at the same time! I’ve been playing around a bit with the calculator on the Canadian Red Cross Website and I found that giving can really make an impact on your taxes as well as your community.
First Time Donor Super Credit
Note: sadly, first time donor super credit has been removed in 2019.
This is like the Superman of tax credits but you can only claim it once in Canada and that’s when you make your first donation to charity with a tax receipt. Still, it can produce great results! Here are some tests I’ve made.
For Québec on a 1500$ donation.
In other words, the super credit can give you up to 250 $ back and represents 25 % of your total donated amount. That means that the more efficient amount you can give to receive all the credit is 1000 $.
With a 1000 $ donation you will receive 744 $ back in Québec and 611 $ in Ontario. That’s astonishing, it means you give all that money and receive almost 75 % (Québec) of what you just gave. This helps people donate more because the government gives them increased buying power.
Not your first donation to charity? Congrats! You still get a bit more than half what you donated in tax credit (Québec).
If you’re in Quebec, the amount is higher than if you live in Ontario most probably to make up to the tax difference. Just as in the example below.
Yes it’s worth donating with a tax receipt because it gives you more donation power while backed by the government. I am not saying not to donate when you don’t have one, but if the amount is higher than 100 $ then it might be worth the trouble.
In my opinion, donating to charity is an investment in your community but if you would like to do so, just make sure you have the money and do not donate on credit. It’s just like buying something you cannot afford. Finally, you can have more information about the types of donations that are eligible for a tax credit directly on the Canada Revenue Agency Website.
Note: this post is based on 2016 tax credits which might change in the next years.