To qualify for a tax credit, which is calculated based on the amount or value of your donation, it must be made to a recognized recipient organization. Your donation can be in the form of money, property, or a gift.
It is important to note that the federal tax credit for donations can be up to 33% of your donation amount. Additionally, depending on your province of residence, you may be eligible for an additional non-refundable tax credit of up to 24%.
However, if you receive something in return as a token of appreciation for your donation, the value of that benefit must be subtracted from the total value of your donation when filing your tax return.
The Canada Revenue Agency (CRA) has a list of organizations recognized as eligible recipients. These can include:
- Various levels of government (Her Majesty in right of Canada, a province, or a territory).
- Foreign charities that have received a donation from Her Majesty in right of Canada.
- Registered charities listed by the CRA.
- Qualified journalism organizations (QJOs).
- Arts organizations.
- Canadian amateur athletic associations.
- Animal shelters or the Society for the Prevention of Cruelty to Animals.
- Low-income housing societies for seniors.
- Canadian municipalities.
- Any municipal or public body performing a government function in Canada.
- Organizations dependent on the United Nations.
- Universities outside Canada that accept Canadian students.
All these organizations, societies, or associations are registered with the CRA as recognized eligible recipients. You can find the full list on the CRA website under “List of Charities and Other Qualified Donees.”
It is important to note that the United Nations, and any organizations under it, as well as Her Majesty in right of Canada, a province, or a territory, are automatically and immediately recognized by the CRA and do not appear on this list.
The tax credit you claim for your donation is non-refundable, meaning it does not result in a tax refund. However, you can carry forward the amount of your donations to reduce your taxes for the next five years, subject to certain limits.
You also have the option to transfer your donation tax credit to your spouse if you don’t need it, for example, due to having a low income. This option aims to reduce your household’s overall tax burden.
It is essential to keep all proof of your donations, as the CRA may conduct audits. Additionally, tax receipts issued by recognized recipient organizations may be required.