Save money by giving it away . . . the more you donate, the more you save.

 

A Guide to Tax Incentives for Donors To Canadian Charities

Let's start with the bottom line. If you give $200 or less to Canadian charities this year, your income taxes will be reduced by at least 25 cents for every dollar you donate.

It gets even better. For every dollar that you donate above the first $200 your taxes will be reduced by at least 40 cents.

So let's say you donate $500.  You save at least $50 on the first $200 plus at least $120 on the other $300. That's a total tax break of $170 or more-in other words, for every $3 you donate you get at least $1 back in tax savings!

* The exact value of the charitable donation tax credit varies slightly according to the donor's taxable income and province of residence.

• Click here to visit the Revenue Canada online resource for donating to charities.

The credit for charitable donations is the best tax break available for many Canadians.

Many Canadians underestimate the real value of tax credits for charitable donations because of the complex way they are calculated.

Here's how it works:

1. Donations of $200 or less reduce basic federal taxes by 17 percent of the amount donated.
2. Donation amounts above $200 reduce basic federal taxes by 29 percent of the amount donated.
3. Provincial income taxes are calculated as a percentage of basic federal taxes, so the federal tax credit reduces provincial income taxes, too (except in Quebec, where donations get a separate provincial tax credit.)
4. Federal and provincial surtaxes are also calculated as a percentage of basic federal taxes, which further increases the value of the tax credit or charitable donations.
5. The tax break for charitable donations is a credit, not a deduction from taxable income-it's subtracted directly from your taxes.